Where Big Box Retailers Fell Short During Online Grocery’s Peak

Approximately one month ago, we looked to our data to further understand exactly how the coronavirus would impact consumer behaviors as the recession loomed. And while we were already seeing that consumers were leaning into stock up behaviors that veered on hoarding (think bulk buying and choosing multi-packs), they were doing so at local supermarkets rather than hypermarkets, big box stores and warehouse chains like Walmart, Sam’s Club, or Costco.

Historically, these big box retailers have been the most popular consumer choice across our shoppable recipe network, since they offer more variety and bigger savings. But our data showed that around March 11th there was a clear shift. This shift falls in line with stay-at-home orders being enacted in a number of states, leading consumers to opt for their local and regional grocers like Kroger and ShopRite. Additionally, our data also showed comparable increases (^732.66% since March) in online marketplaces like Instacart, which connects local grocers to consumers for their online grocery shopping. The coronavirus pandemic led consumers to adopt online grocery shopping and delivery at an unprecedented rate, but growth was especially drastic for Instacart, which used this momentum to recently close $225 million in new funding.

The shift away from big box retailers and toward local and regional grocers for their online grocery needs can be linked to rather specific factors. Before the pandemic began, many consumers ordered groceries online to pick up in-store. However, as the severity of the pandemic intensified, consumers felt unsafe traveling longer distances and encountering larger crowds at big box retailers. According to a First Insight survey, 54% felt safe at grocery stores, the top choice, and 45% felt safe at big box retailers, the third choice. Often, consumers felt uncomfortable venturing out to big box retailers, fearing more risk of exposure to the virus, with consumer tendencies falling in line with social distancing and stay-at-home orders.

For many retailers, the coronavirus pandemic has brought to light the true importance of ecommerce. Especially during the panic-buying phase of the pandemic, consumers bought way more than necessary, fearing that they would be left without or unable to find necessities.. Inundated with more online grocery demand than they could handle, big box retailers fell short when online grocery’s moment came. As such, consumers turned to smaller grocers that may have been able to more nimbly manage inventory and stockouts. These reasons may explain the explosion in Instacart’s growth which, according to The Information, now claims 57% of the online grocery market as it makes ecommerce and delivery possible for smaller and regional grocers that don’t have the bandwidth to offer those services independently.

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