Consumers are increasingly buying everything online. However, buying groceries, especially fresh produce, online hasn’t really caught on, until recently and could have a huge effect on grocery store insurance and the industry as a whole.
With Big retailers and tech companies such as Google and Amazon hoping to break open the online grocery market by offering customers same-day grocery delivery for a small fee, local markets and grocery stores should be watching carefully to help maintain their profit margins.
The corporations’ efforts to expand online grocery shopping could inadvertently cripple smaller grocery stores and markets, potentially raise grocery store insurance rates, and stunt the growth of “farm-to-table” movement that encourages people to eat locally grown and produced food.
Last year, Amazon’s AmazonFresh expanded beyond the company’s hometown Seattle to California and expected to reach more cities this year. Other than a few local shops that sell fresh fish or pasta, the majority of sales on AmazonFresh come from produce that is shipped from Amazon’s warehouse rather than the produce from local growers that is popularly found at most traditional grocery stores.
Recently, the online grocery shopping industry is making a profit of approximately $15 billion a year, which is equal to about 3 percent of traditional supermarkets’ approximately $600 billion in sales. While this is still a small percentage, the online industry is expected to grow 13 percent a year, which means is will account for about 11 percent of all grocery sales within the next decade.
The public reaction to the online grocery movement tends to be mixed. While wealthier and younger Americans tend to favor a trend toward moving everything online, the elderly and those who want to support local produce are vehemently against the movement toward online grocery shopping.
But even as the popularity of eating locally grown food continues to rise, the convenience of online shopping could override the desire to buy local products for many consumers. In a world that is all about moving fast, convenience and ease means everything. While the traditional grocery store won’t die out anytime in the near future, in the long term, it wouldn’t be surprising to see physical grocery stores going the way of book stores and record stores.