YOUR BUSINESS AUTHORITY
Springfield, MO
YOUR BUSINESS AUTHORITY
Springfield, MO
The U.S. online grocery market has experienced a major sales uptick in recent months, a trend that Springfield grocers say isn’t reflected locally.
December marked the fifth straight month in which U.S. consumers spent at least $9.5 billion in purchasing groceries online. The e-commerce activity, which comprises delivery, pickup and ship-to-home methods, ended last month with $9.6 billion in monthly sales, an 18.7% increase year over year, according to a survey conducted by strategic advisory firm Brick Meets Click and digital commerce provider Mercatus Technologies Inc.
The December numbers followed similar sales in November and a record high of $10.5 billion in October, according to the report.
Local grocers MaMa Jean’s Natural Foods Market LLC and Pyramid Foods, which operates Price Cutter and King Food Saver stores in the Springfield area, say they remain invested in offering online grocery shopping to customers. However, company officials don’t yet see the option moving the needle much in annual sales.
“It’s in the 1%-5% of our sales. That’s just depending on our stores,” said Charlie Dunn, district manager with Pyramid Foods, declining to disclose annual sales figures. “We have some stores that do very little online business out in the more rural areas, but we know it’s going to grow, and any percentage of sales we take really serious.”
Nationally, retail sales for grocery stores reached nearly $75.2 million in November, according to the most recent data available from the Federal Reserve Bank of St. Louis. That’s up roughly 2% year over year.
While declining to disclose online grocery shopping customer numbers, Dunn said the average growth of active users is 12% since 2020.
Pyramid Foods operates 36 store locations with most in southwest Missouri, he said. The company first began offering online shopping in 2006 and rolled out a new website a decade later.
“We definitely know that we need to stay relevant and keep our online business growing,” he said.
According to research by Capital One Shopping, U.S. online grocery sales increased 131% during the pandemic, with projections indicate a continued annual growth rate of 15.6%. Roughly half of American adults report purchasing groceries online.
Convenience choice
MaMa Jean’s had fortuitous timing for its debut in the online grocery landscape, as it began offering the service at the start of 2020, just weeks before the start of the COVID-19 pandemic. Tanner Bean, director of marketing, said the company initially launched it at its 3530 E. Sunshine St. and 1110 E. Republic Road stores. The company operates three locations in Springfield.
While customers can place orders to be delivered through e-commerce platform Instacart at all three locations, Bean said only its East Sunshine Street store currently is offering curbside pickup.
“We did have it at Republic [Road] for quite a while during the pandemic,” he said, noting the service ended in 2023. “Once that kind of slowed down, the Republic Road store, it just wasn’t as busy as it used to be as far as the curbside pickup.”
MaMa Jean’s officials say curbside makes up roughly 2% of store sales, declining to disclose annual totals. The East Sunshine Street store typically has 10 or fewer curbside orders per day with about 80% repeat customers.
Still, Bean said he has no doubt online grocery shopping is here to stay as a habit well beyond the pandemic. He initially thought it was more of an appeal for younger generations, but most of the store’s curbside orders are from customers in the 55-70 age range.
“It’s convenience. There’s just so many aspects to be online,” Bean said. “Everyone has a busy life, and it is so easy to go online, build your cart and select whatever time you’d like to be able to come by.”
Both Pyramid Foods and MaMa Jean’s utilize the e-commerce platform from Rochester, N.Y.-based Freshop, which is accessed through the grocery websites. Dunn and Bean declined to disclose their companies’ ongoing investments in the e-commerce space. Bean said MaMa Jean’s has a couple of workers dedicated to fulfilling online orders as their primary job. Roughly 10 stores for Pyramid Foods employ a handful of full-time staff to process orders, Dunn said.
The recent report from Brick Meets Click and Meratus on U.S. online grocery activity noted delivery last month grew to $4 billion, nearly 25% over a year prior, accounting for 41.7% of total online grocery sales. Pickup monthly sales finished at $3.8 billion, with 39.4% of sales, followed by ship-to-home, which reached $1.8 billion and contributed 18.9%.
Mass retailers such as Walmart have been cutting into grocers’ share of e-grocery sales since early 2022, according to a separate Brick Meets Click and Meratus report released last year. Walmart captured 37% of the U.S. online grocery market during the second quarter of 2024 – an all-time time high for the company.
Officials with Walmart Inc. (NYSE: WMT) declined an interview for this story but provided a statement: “We’re continuing to strengthen, expand and innovate our online pickup and delivery offerings, which are a huge convenience driver for our customers, providing them with more options and flexibility. Pickup and delivery for Walmart U.S. has been a key source of growth and share gains and has become one of the most productive channels for acquiring Walmart+ members.”
Even as online shopping grows in popularity nationwide, stores are still evaluating the in-store experience of shoppers.
As of Jan. 15, self-checkout lanes have been removed at both Hy-Vee stores in Springfield and are being replaced by those staffed with employees, officials at each location confirmed.
Nola Aigner Davis, senior communications manager with Hy-Vee Inc.’s corporate office in West Des Moines, Iowa, released a statement on the decision.
“We are removing self-checkouts from some stores. At Hy-Vee, we want to provide a better customer experience in several of our stores by bringing back the face-to-face interaction with our employees that we had pre-COVID. Retailers like Target and Walmart have already been removing self-checkouts across the country for several months, so we are not the first to do this.”
Looking ahead
The national growth of online grocery shopping was born for some out of necessity during the pandemic, said Carly Asher-August, senior instructor of marketing at Missouri State University.
“Sometimes people don’t realize how great something is until they’re almost forced to try it. Pandemic shopping really changed a lot of consumer behaviors,” she said. “We were forced to adapt our behavior and then realize that actually a lot of people liked it, and it’s hard to get away from that after you’ve done something for 18 months, two years.”
Asher-August said consumers will continue to make shopping choices based on what’s most convenient for them.
At MaMa Jean’s, changes are coming to the point-of-sale systems this year, Bean said, noting that should allow the company to bolster its online shopping services. The desire is to focus more on growing curbside and delivery to be relevant to all generations, officials say.
“We’re going to definitely give the POS just kind of like a dry run basically in the next month or two, as I’m sure there’s things that we’ll need to iron out,” he said. “That is our goal for this year is to really ramp up our curbside and delivery for all of the locations.”
Under the weight of rising health care costs, an increasing number of people are surging to the Health Insurance Marketplace rather than opting for employer-sponsored plans.
