Study shows that online grocery shopping and meal kit purchases are increasing

A recent study by Valassis concluded that consumers are embracing new grocery shopping options like online ordering and delivery, and meal kits. Of 1,000 U.S. adults surveyed, 7% said they order groceries online weekly, but that increases to 14% for parents, 12% for millennials, and 15% for millennials with children.

In addition, 5% of all respondents said they order a meal kit online once a week, compared to 10% of parents, 10% of millennials, and 14% of millennials with kids.

Among those ordering groceries online, in-store pickup was a preferred option. Eight percent of all shoppers polled said they order groceries online and pick them up from their local store, compared to 17% of parents, 14% of millennials, and 20% of millennials with children.

"From home delivery services to the growing presence of organic items, emerging channels and trends are changing the way shoppers buy and, in turn, how brands reach and activate their target audiences," said Valassis Chief Marketing Officer Curtis Tingle.

The study also reported the following:

Thirty-three percent of all shoppers reported that they buy only or mostly organic and natural products, compared with 48% of parents, 50% of millennals, and 60% of millennials with kids.

Overall, 69% of the shoppers surveyed save money with print, digital media and/or loyalty cards.

FIfty-six percent of those surveyed said they use grocery, drug, mass and/or supercenter savings apps, up from 51% in 2017 and 38% in 2016.

Walmart focusing on freshness

A Supermarket News story last week reported that Walmart is making a significant effort to increase the company's emphasis on fresh products in its stores. For instance, a Walmart official said they are improving product quality and variety in the bakery section, where they have brought in new products and better quality recipes.

"Bakery is a bigger piece now than it's been in the past," said Shawn Baldwin, Walmart's SVP of Fresh.

According to Walmart U.S. CEO Greg Foran, customers want more fresh items at low prices.

"The key to that is produce, because that unlocks the rest of the grocery basket," said Foran. "If you have a good produce department they generally will buy all their groceries from you."

The emphasis on freshness also includes product presentation. Baldwin said that in new Neighborhood Market stores, customers can see back to the deli upon entering the store. In addition, in a new Supercenter in Arkansas, Walmart is testing a 12-foot counter showing fresh steaks.

Walmart slowing down growth of Neighborhood Market's smaller format stores

Walmart's US CEO Greg Foran said in an earnings conference call last week that the company would open 10-15 of the small format Neighborhood Markets this year, then hold off on further investment in the concept until results can be studied. As of January 30, Walmart operated 88 of the smaller-format stores, which are typically in the 12,000 - 16,000 square foot range.

Last year, Walmart opened 68 of the small format Neighborhood Market stores, far less than the 110-120 forecasted. These stores were once known as Walmart Express, but the company dropped the Express name late last year.

"Their supply chain is optimized for the supercenter," said Kantar Retail Analyst Dave Marcotte. "It can work reasonably well for a (traditional) Neighborhood Market, but when you keep going down in size, eventually it's going to become an issue."

Walmart plans to open 180 - 200 traditional Neighborhood Market stores this year, which typically range between 38,000 and 42,000 square feet.

BB&T Capital Markets Analyst Andrew Wolf told Supermarket News that there is not a lot of evidence to show that small stores really work. He continued to say that Aldi and Trader Joe's are the exception, not the rule.

Walmart Neighborhood Market may accelerate its rollout

Earlier this month Walmart CEO Bill Simon said the company could accelerate the rollout of its Neighborhood Market grocery stores. According to Simon, Walmart had plans to open 80-100 Neighborhood Market stores this year and next, but that number could increase as returns on newly built stores approach those of its supercenter format.

"Neighborhood Market is a really cool format," said Simon. "It's a grocery store combined with a drug store put in a place where a dollar store would be."

And just to scare grocery stores, drug stores and dollar stores a little more, Simon kept talking.

"Imagine a drug store that has Walmart's prices that has fresh food, fresh produce and fresh meat. Imagine a convenience store that has pharmacy and fresh food. Imagine a grocery store that also has a pharmacy and, in many cases, gas, and the prices Walmart has. It just really works well against any competitive set it operates against."

Simon and the company he runs have a lot in common. They both lack eloquence, but make alot of money!

Walmart ramping up its smaller-format stores

Wal-Mart said earlier this month that its smaller-format stores are making inroads against dollar stores, supermarkets and pharmacies, and that the company will increasingly move toward stores below 60,000 square feet.

During the current fiscal year, Wal-Mart's Bill Simon said they expect to open about 115 smaller-format stores, with The Neighborhood Market and Express locations accounting for about 40% of stores the retailer opens. Simon calls it a "rapid ramp-up."

"We can deliver price, and assortment and fresh food and Rx," said Simon, who believes the smaller-format stores provide a full package of products and services that competitors lack.

Even with the growth of these smaller-format stores, about 90% of Wal-Mart's existing stores are supercenters or large stores. The company plans an additional 125 supercenters this year.

Walmart to invest billions in food pricing

Last week Walmart's chief merchandising officer said the company plans to invest $6 billion in retail pricing by 2017, with the investment primarily in food and consumables. He also said they expect to have more than 500 Neighborhood Markets operating - with total sales of $10 billion - by fiscal 2016.

According to Walmart's website, there are currently about 200 Neighborhood Market stores and they are approximately 38,000 square feet (SF) each.

The website states that "Walmart Neighborhood Markets offer fresh produce, meat and dairy products, bakery and deli items, household supplies, health and beauty aids and a pharmacy."

There are currently about 3,000 Walmart Supercenters (182,000 SF) and 600 Walmart Discount stores (106,000 SF) in the United States.

Walmart to have 300 Neighborhood Market stores by 2013

According to an article in Shopping Centers Today, Walmart said last week it plans to nearly double the number of its Neighborhood Market supermarkets over the next three years. Currently the company operates 185 of these stores, including 30 in Puerto Rico.

Walmart President and CEO Bill Simon is counting on the 42,000 square foot stores to help revitalize same-store growth after several sluggish years, while also easing entry into urban markets that don't have the room for a Supercenter.

Simon added that Neighborhood Market stores are easier to develop than Supercenters, which can take up to seven years to open.

The article also points to Walmart's Pick Up Today program, which allows customers to place orders online for pickup at a local store, as an additional benefit of the Neighborhood Market stores. The program launched last year and Simon said results have been encouraging.

The Lehigh Valley grocery scene continues to evolve

One might think that a drive up north to the Lehigh Valley would alleviate the grocery schizophrenia we experience in the Philadelphia market. Not so. Apparently, Lehigh Valley consumers need a scorecard - not to mention a pencil with a good eraser - to keep track of the industry players and their comings and goings.

Coming:

• Bottom Dollar currently has four locations in The Valley, and may have as many as seven in the next year.
• Weis Markets has increased its budget for adding and updating stores, according to a company spokesperson. The grocer currently has 14 locations in The Valley and will soon have 16, second only to Giant.
• Giant, with 17 locations in The Valley, has been spending money on renovations at a number of area stores.
• A ShopRite is proposed in Trexlertown, along with a Target and BJ's. 
• Walmart is a major player in the area, of course, and the Whitehall location will soon become a Supercenter and include a full-service grocery store.
• Three of the four Target stores in The Valley include a Fresh Grocery section.
• Dollar stores and drug stores continue to expand their grocery selections.

Going:

• Pathmark shut its location in Lower Saucon, which is causing residents and reporters to speculate as to who will take over the space.
• Wine kiosks - Wegmans is pulling PLCB wine kiosks from all its Pennsylvania stores, including Allentown, Bethlehem and Easton, the three major cities in the Lehigh Valley (also known as A-B-E).

As always, I'm afraid something may have changed since I started writing this blog post.