24-hour supermarkets disappear as online grocery boom shifts priorities - Latest Retail Technology News From Across The Globe - Charged (2024)

FAQs

Why supermarkets are struggling to profit from the online grocery boom? ›

But most grocery retailers don't seem to be able to turn this huge market potential into sustainable profit. Low margins combined with low purchasing volumes make many grocers see ecommerce as a no-gain prerequisite for survival, rather than an opportunity for growth.

The advent of speedy grocery delivery created fear that shoppers would abandon physical stores, but that hasn't happened, said Kenneth Katz, principal of retail real estate brokerage and development company Baker Katz.

Technology advances also are helping grocers automate key parts of their businesses, including inventory management, customer marketing, and in-store checkouts. These changes promise to help reduce grocers' costs, boost revenues, and improve product availability and the overall customer experience.

Over the past few years, there has been a significant increase in the adoption of online grocery shopping. This surge has been fueled by factors such as convenience, time-saving benefits, and the proliferation of mobile apps and online platforms offered by retailers.

Here's why those balances can be difficult to pay down. Americans have been grappling with higher food costs since 2021. To get relief, some are turning to credit cards, buy now, pay later programs or payday loans.

There are signs the decline could be even deeper. Bloomberg Second Measure, which tracks anonymous credit and debit card transactions, recorded an 8.7% drop in Target's sales during the quarter. The size of the sales decline has the potential to surprise the market, Citigroup analyst Paul Lejuez said in a report.

Saunders said one of the primary problem for Macy's is that its holding company, formerly known as Federated Department Stores, spent much of its resources on buying other department store brands, such May's Department Stores, and Filene's, rather than investing in the stores its held.

High-end malls do seem to be having a bit of a resurgence — foot traffic at “top-tier” malls (defined by having shoppers with an annual income of more than $200,000 and a mix of luxury retailers and direct-to-consumer brands) was up 12% in 2022 compared to pre-pandemic 2019 levels, according to Coresight Research, and ...

Overall, the grocery store of the future will likely be smaller, more technology-focused, and designed to meet the needs of an increasingly diverse, environmentally conscious, and convenience-oriented consumer.

E-commerce and Omnichannel Strategies

Omnichannel strategies, which combine physical stores with online platforms, are now essential for a cohesive customer experience. Retailers are increasingly investing in technologies that bridge the gap between their digital and physical presence.

How technology is changing the grocery industry? ›

AI can analyze historical sales data, weather patterns, seasonal trends, and other relevant factors to predict consumer demand for specific products. This can help grocery stores optimize their inventory levels, reduce waste, and ensure that popular items are always in stock.

(NewsNation) — Consumers are turning to buying groceries online as a way to save money, driven by aggressive promotions from major players like Instacart, Amazon and Walmart, according to a new report by Consumer Affairs. Online grocery sales expanded to $7.7 billion in June 2024 — up 8% from a year ago.

Many grocery stores have bright lights, crowded aisles, a wide rang of products, and background noise that can lead to sensory overload for many.

US ecommerce sales growth rate flattens in Q2

Ecommerce grew 6.6% year over year in Q2 2024. Meanwhile, ecommerce penetration of total U.S. retail sales in Q2 is up almost 1% from the previous year.

Dive Insight:

Societal challenges like lack of civility, drugs, theft and violence are also top concerns for the industry. In 2023, profit margins in the grocery industry hit 1.6% — the lowest level since it was 1% in 2019 — as total expenses increased, FMI found.

According to FMI, The Food Industry Association's 2023 report, less than half (45%) of all online grocery businesses are profitable.

Kroger didn't have the infrastructure to ship goods to customers. Building warehouses and wooing tech talent to build an online-grocery portal would have cost hundreds of millions of dollars, employees say.

In This Article

As 2024 unfolds, supermarkets and grocery stores continue to grapple with inflation, supply chain disruptions, and labor issues, while food prices continue to top the list of consumer concerns, particularly among Generation Z and millennials.