Food sales that could grow online vs. in-store

Articles
May 23, 2012

Food sales that could grow online vs. in-store

The primal nature of food buying will keep meat, produce and other perishables sales in stores—even if other goods shift to automated reorders online.

Odd couples? It may appear that way at first.

But brick-and-mortar retailers know that as compelling as they make their stores, online sales will continue to encroach and showrooming will endure—because consumers have the power of pricing, product and review information in their mobile devices and increasingly use it. Consumers are also drawn to e-commerce operators that connect with them in ways beyond pushing goods for sale—the sites inform, entertain and dwell on their interests.

So physical stores are beginning to pair up with online merchants and marketing experts to marry two worlds—their own established distribution with the multi-level bonds achieved by younger companies in the online world. The New York Times reported on recent experiences by Walgreen, Walmart and Nordstrom to either acquire or partner with such online entities.

Retail growth won’t come from square-footage over the next 10 years—and “there’s a way we can help them and they can help us,” Jamie F. Nordstrom, head of the department store chain, told the paper.

Yet food purchasing is a more emotional, more primal behavior than either apparel or drugs, believes The Lempert Report. For that reason, meat and produce are the kinds of categories that will continue to be bought in person—while packaged replenishables such as paper towels, detergent, bottled water and coffee can suit an online, automated repurchase model such as Alice.com.

In short, we expect hybrid growth ahead in the retail food sector. Amazon is proof of online traction, but with some apparent limits to category breadth of appeal. Eleven of Amazon’s Top 20 sellers in the grocery and gourmet food sector are coffees or coffee accessories.  Less prominent on the list are coconut oil, coconut water, peanut butter, snack bar, cold cereal and organic infant formula products.