Grocery Stores Are Straining To Be Everything To Everyone

The days of double masking to grab a gallon of milk and wiping down groceries with sanitizing wipes may be over, but as the dust is settling on all the retail disruption that went down during the pandemic, it seems that some of the grocery shopping habits we picked up during the pandemic are turning out to have staying power—most notably, curbside pickup.

The happy medium between delivery and in-store shopping, ordering groceries online and scheduling pickups is quickly becoming many shoppers' first choice method, and even more consumers seem to be trending toward a hybrid model of in-store shopping and curbside pickup, depending on the day—a phenomenon retailers are calling omnichannel shopping.

A 2022 survey of 2,426 shoppers by PYMNTS.com found that only 44% of shoppers bought their "common grocery items" in brick-and-mortar stores last year, which is a 29% decline from early 2020. Even more compelling, the same report found that the percentage of shoppers who didn't buy anything from physical grocery stores went from 2.2% in early 2020 to 37% in 2022.

It looks like it took a worldwide health crisis to get everyone on board with online grocery shopping. But now that everyone has gained familiarity with the service, as we settle back into pre-pandemic habits, is it really here to stay? A recent influx of pickup-only grocery stores popping up around the country means many companies are banking on it.

"We believe that grocery shopping can be better and have embarked on a mission to make buying groceries 'nearly' fun again," Alex Ruhter, CEO of JackBe in Oklahoma City, said to Supermarket News. The outlet reports that JackBe has secured $11.5 million in capital funding with a goal of rapid expansion.

JackBe is a curbside-pick-only "drive-thru" grocery store that opened in January 2023, and it's part of a growing trend of online-only grocery stores. They're sort of like ghost kitchens, in that shoppers can never go inside; customers can only pick up orders they placed online prior to arrival. This concept isn't entirely new—maybe you've heard of "dark grocery stores," those customer-less spaces that function as delivery fulfillment centers that grew in popularity during the pandemic.

But it turns out that instant grocery delivery services aren't all that profitable, and as The Atlantic explains, it's not for lack of trying.

"Pandemic or no pandemic, delivering highly perishable goods to millions of people, often with the promise that those goods will arrive in as little as 15 minutes, has proved a very tricky business," Amanda Mull writes. "The unit economics are bad, the margins are bad, and the logistics infrastructure necessary to make the actual service function, even unprofitably, is extraordinarily complicated (bad)."

Delivery services that expanded rapidly during the pandemic have found themselves struggling lately, including GoPuff, which laid off 10% of its workforce in 2022. Winsight Grocery Business also reports that on a year-to-year basis, grocery delivery fell flat at $3 billion as of January 2023.

JackBe in Oklahoma, Addie's in the Boston area, OPIE in South Carolina, and other stores nationwide aren't interested in the hangups of delivery. With pickup-only service, they can skip extra delivery fees, sidestep the logistics of operating a fleet of vehicles and drivers, and charge prices comparable to traditional grocery stores, which makes them a competitive option. Plus, while grocery delivery was nice when everyone was locked down, scheduling those deliveries is less convenient now that people are out of the house and returning to their busier pre-pandemic routines.

"I don't see shopping as a hobby, rather as a job," said Leo Graham of Milwaukee, who says he shops for most of his groceries these days online and then picks them up when he's ready. "Curbside works for me because it's flexible; within some limits you can pick up your order when you want. With delivery, you have to be home when they arrive. If you're lucky, you'll get a two-hour window of a delivery time. That's a lot of waiting."

Pickup-only groceries offer some other distinct perks as well. Not only can you skip the human contact factor of in-person shopping—a major selling point for the immunocompromised—but it can also help you stick to your list and significantly cut down on impulse buys, which can account for as much as 62% of grocery store sales, according to a 2013 study. Lots of parents also seem happy to sidestep the hassles of dragging young kids through the supermarket.

"We buy a lot of the same stuff week after week, so it's easy to save those items and plop them in my cart," said Amanda Colburne of Londonderry, Vermont. "Also, going grocery shopping with kids is not ideal, so this saves me a lot of unpleasant times in a long line in the store."

Picking up pre-bagged groceries isn't the perfect solution, of course. There's something to be said for selecting your own apples from the display and eyeballing deli meats to be sure they're sliced perfectly thin. And while pickup might be great for people who plan ahead or shop for the same products again and again, quite a few shoppers prefer to browse the aisles for inspiration. For these folks, ordering from an app isn't as useful.

"I'm someone who rarely shops with a menu in mind," said Ryan McNamara from Portsmouth, New Hampshire, who leaned on pickup groceries during the early days of COVID but has since transitioned back to only in-person shopping. "I go to the grocery store two to three times a week. I head to the seafood and meat section first to see what looks good or is on sale and make a menu decision. Then, once I pick the proteins, I head to the produce aisle to round out the plate. I don't trust a store worker to pick my proteins or produce."

There are also fewer choices at the pickup-only stores, at least those that are part of this first wave of the trend. Addie's in Norwood, Massachusetts, for example, stocks only around 4,000 items according to Supermarket News, which is significantly less than the average 35,000 in a traditional grocery store (per The Food Industry Association). Pickup groceries can also be more expensive depending on where you shop, and third-party apps like Instacart will add fees to the bottom line.

Curbside shopping is definitely growing—Winsight Grocery Business reports that pickup grocery sales are up 2.5% to $4.1 billion as of January 2023—but the trend is far from a sure thing. Walmart recently closed its pickup-only concept locations that have been open since 2014, and Fresh Street, an independent startup that opened in the Chicago area in 2022, has decided to change course and is now focusing on a wholesale marketplace concept for retailers.

A juggernaut Walmart doesn't need pickup-only locations to compete, and for every other curbside concept, it might just be a matter of timing. Still, even if customers don't make it their primary mode of grocery shopping, a lot more people will be going curbside in 2023, if only once in a while. That speaks to the grocery trend that's truly booming: omnichannel shopping.

"While the vast majority of consumers still at least occasionally shop at physical grocery stores," notes PYMNTS, "the trend of hybrid shopping — buying groceries both online and in-store — is quickly becoming the norm."