Grocers Shifting Focus to Online Shopping, Need for Brick and Mortars Changing

DES MOINES, Iowa -- Either you find walking into a  grocery store and wandering the aisles enjoyable, or you look at it as a nightmare chore that needs to be tackled every other week. The grocery industry is having to change its mindset to better suit the needs of the latter, as a means to making shopping more convenient. Brick and mortar grocery stores won't be going away anytime soon, but the real growth is online. Is online the future of grocery shopping?

"I think it`s a part of the future of grocery," says Matt Ludwig, EVP of Hy-Vee's e-commerce department. Since the launch of Hy-Vee's "Asiles Online" program in 2015, officials wouldn't give specific numbers, but they say it has grown exponentially every year. The appeal is obvious.

"How do you take friction out of the shopping experience and how do you provide the best product at the best price in the most convenient matter?" Ludwig says.

Online shoppers can skip the lines, add items to their virtual cart throughout the week, online to be hand-picked by personal shoppers and delivered or picked-up when they choose. As convenient as it is, the Iowa Grocery Industry Association says online sales only make up about three percent of total sales statewide.

"We don`t see very many people who shop just exclusively online. Most of the customers are shopping both in store and online," Ludwig says. Despite that, there is still a need to make shopping easier. Third-party grocery delivery sites like Shipt or Instacart partner with stores in the area. Ludwig says those sites aren't viewed as competitors but allies giving shoppers what stores like Hy-Vee can't.

"They provide things such as almost immediate delivery. You can have a delivery window within two hours a lot of times when you place your order," said Ludwig.

The sense of urgency is what the Iowa Grocery Industry Association says is keeping the industry on its toes.

"I think it`s that rapid pace that we’re seeing the change. I think that`s one of the things that keep people up at night in the retail industry, what is next and how quickly is it coming," says Michelle Hurd. Hurd serves as the association's president. She calls the online appeal a part of the natural industry shift.

"One thing you don`t think about is the microwave. It changed the products. It changed packaging. It changed the grocery store layout," she explains but admits the shift to technology comes at a price.

"Technology is moving quickly and it's expensive but there is a need to be in the game," said Hurd.

Locally-owned Brick Street Market in Bondurant is moving its store online. Owner Brian Lohse says it is what's needed to keep up with the competition. It's costly and resource draining, two things Lohse knows not every independently owned grocer can afford to do. He hopes the return on investment isn't worth it just for his store but the community, too.

"Certainly there will be more opportunity for the need for deliveries, people to pick the grocery items off the shelf and compile the grocery order. This will certainly build our sales but also workforce to meet that demand," he says.

Grocery experts say the need for brick and mortar stores still exist. Research shows 80 percent of shoppers still prefer shopping in person.

"I think you are really seeing grocers and retailers who are creative and innovative with ways to still get consumers in the brick and mortar stores," says Hurd. Hy-Vee has more plans to roll out more of its Fast and Fresh format stores, as well as Fareway Stores effort to build more stand alone meat markets.

According to a study by the Food Marketing Institute, 63 percent of food retailers currently sell food online. To keep up with demand, Hy-Vee opened a fulfillment center in Urbandale in 2016 specifically to accommodate online orders.

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