Forecast: Consumers’ use of grocery apps to nearly double this year
Grocery apps are among the fastest-growing apps in the United States, and their momentum shows no sign of slowing.
This year, 18.0 million U.S. adults will use a grocery app at least once a month, up 49.6% over last year. This is based on smartphone users who have at least one grocery app on their phone, according to a forecast from eMarketer.
When analyzing the adoption of apps that primarily deliver produce and perishable items, including meal kit services, more than one in five adult smartphone m-commerce buyers will use a grocery app to order food by next year.
“Shoppers are becoming more comfortable with ordering online in general, and grocery is a part of that,” said eMarketer senior analyst Patricia Orsini.
The key hurdles for ordering fresh produce and other perishable items online typically has been delivery time, and the desire to hand-select produce and meat. The good news is more retailers are overcoming these hurdles.
“Retailers have been able to transcend these barriers with click-and-collect models of delivery — order online, pick up in-store. And if the shopper is ordering from their regular grocery store, familiarity helps them trust that the products will be of the quality they expect,” Orsini added. “A bad experience, however, could turn consumers off for good, so retailers need to ensure they provide a good experience from day one.”
According to the report, robust growth for grocery apps is being fueled by the Amazon/Whole Foods merger and Walmart, which is expanding its grocery delivery from six cities to 100 by the end of the year. Yet, the general food and beverage category (which includes non-perishables) is one of the most under-penetrated within the U.S. e-commerce market. At $14.94 billion, food and beverage retail e-commerce sales will represent just 2.8% of all U.S. e-commerce sales this year.
“The percentage of online grocery sales remains small, [but] it is one of the fastest-growing online categories,” Orsini said.
“While no one expects the number of brick-and-mortar grocery stores to seriously decline, the options consumers will have to purchase groceries will increase,” she said. “Retailers recognize this; they are improving their online offerings in order to retain market share.”
H-E-B to open digital tech lab
H-E-B, the Texas grocery powerhouse, made a new move to strengthen its position in the digital retail space.
The supermarket retailer is developing a “world-class” tech facility and innovation lab in East Austin, Texas. The 81,000-sq.-ft. facility, expected to open next spring, will house the company’s growing H-E-B Digital team and Favor, the Austin-based on-demand delivery service that is a wholly-owned subsidiary of the company. (The grocer acquired Favor Delivery in February.)
H-E-B is converting an industrial warehouse into a creative and collaborative workspace for Austin-based employees of the H-E-B Digital team and Favor’s corporate headquarters. Architecture firm, IA Interior Architects, is fully customizing the two-story space.
The lab is also on the hunt for talent that will bolster the digital and Favor teams. The company plans to add several hundred jobs, and is hiring across all areas of expertise, including product management, product design, and software engineering, according to H-E-B.
The new facility coincides with the company’s other strategic moves designed to enhance H-E-B’s digital and delivery offerings. In addition to acquiring Favor Delivery, the grocer also offers home grocery delivery through its HEBtoYou program, as well as curbside pickup — a service that enables customers to order online and have their groceries delivered right to their cars. The service is available in more than 145 locations across Texas, and is on track to reach 165 stores in 2018.
The company has also named Jag Bath, Favor’s CEO and president, as its chief digital officer, and Mike Georgoff as chief product officer for H-E-B Digital. Georgoff was previously chief product officer at Main Street Hub, an Austin-based digital marketing firm that was acquired by GoDaddy earlier this year.
RILA goes all out for tech in September
The Retail Industry Leaders Association has kicked off its month-long initiative “September is for (R)Tech.” Throughout the month, RILA will showcase news, initiatives and research focused on the future of retail and shopping experience.
RILA launched the (R)Tech Center for Innovation in 2017 to help retailers navigate the industry’s transformation through research, insights, collaboration, and exposure to new technologies. Now in its second year, the center will mark September with a release of new research, launch its (R)Tech Innovation Network, host a retail-focused challenge at MIT’s annual HACKMIT event, and announce its collaborative (R)Tech Open Innovation (ROI) Engine initiative.
“We are excited to continue helping America’s most recognized brands connect with cutting-edge startups, access a growing talent pipeline, and find new ways to accelerate their business,” said Adam Siegel, senior VP of innovation for RILA. “The industry has seen tremendous growth, which shows that a focus on innovating the consumer experience has only furthered retail’s transformation.”
Later this month, RILA will launch two key pieces of research that will help the industry focus on the wants and needs of the 21st century shopper. In partnership with Accenture, RILA will release “Delivering for a New Consumer,” a look into the wants of a today’s consumer and the ways in which retailers are meeting demands.
In addition, RILA will also release additional research on “Shopping Styles in the (R)Tech Age,” which defines the 10 distinct shopping styles of Millennial and Gen Z shoppers.
On Sept. 15 and Sept. 16, RILA will team up with Qurate Retail Group and head to the Massachusetts Institute of Technology (MIT) to host a retail-focused challenge at HACKMIT 2018. (Qurate is comprised of eight leading retail brands, including QVC, HSN, Zulily, Ballard Designs, Frontgate, Garnet Hill, Grandin Road.) At the event, students will reimagine the way consumers shop alongside software engineering and retail mentors — creating innovations that will enhance the shopping experience using 3D product technologies.
This month, the center will formally launch its (R)Tech Innovation Network, which convenes incubators, accelerators, and venture capitalists with a focus on retail technologies and innovations.
Now in its second year, RILA will announce a call for participants for its annual (R)Tech CEO Innovation Awards, which highlight innovations that enable retail’s future. Winners are hand-picked by retail executives and invited to showcase, pitch and network with the most recognized retail CEOs at RILA’s annual Retail CEO Forum January 20-22 in Amelia Island, Florida.