Food and Drink E-Commerce in the US

2020 IMPACT

COVID-19 triggers unprecedented growth in food and drink e-commerce sales

Even as some states and municipalities in the US imposed strict lockdown measures during the initial surge of the COVID-19 pandemic in March and April of 2020, grocery stores - classified as essential retailers everywhere in the country - remained open to walk-in traffic. As a result, most US grocery retailers saw their sales spike - in part due to the implosion in the US consumer foodservice sector, as temporary restaurant closures forced consumers to prepare more of their meals at home.

Instacart, once a niche brand, emerges as an indispensable service provider

Perhaps no companies operating within the food and drink e-commerce space have seen their fortunes improved by the COVID-19 pandemic as much as hyperlocal delivery services, with consumers in many countries turning to these companies to have groceries delivered from their favourite local supermarkets. With demand for grocery delivery hitting all-time highs, legacy grocers that did not already operate their own proprietary delivery services - and may have been reluctant to hand over a slice of their sales to third-party service providers in the past - found themselves scrambling to partner with hyperlocal players in 2020 to avoid missing out on the online grocery sales boom.

Target reaps the dividends of adding perishables to its curbside pick-up service

Although curbside pick-up service was pioneered in Western Europe by retailers such as Carrefour and Auchan, the service has found a more receptive audience in the suburban and rural expanses of the US, where access to a vehicle is virtually a requirement. Curbside pick-up allows grocers in these areas to service digital orders for essentially the same number of customers as delivery but at much lower cost.

RECOVERY AND OPPORTUNITIES

Food and drink e-commerce sales expected to post slight declines in 2022 and 2023

In 2020, the COVID-19 pandemic pushed US food and drink e-commerce sales into the stratosphere, as consumers sought ways to shop for groceries that allowed them to avoid having to enter brick-and-mortar stores. Yet, after a year of triple-digit sales growth, it will be difficult for the US food and drink e-commerce market to sustain this same trajectory over the forecast period.

Ubiquitous grocery curbside pick-up will be a lasting legacy of the pandemic

Due to the COVID-19 pandemic, more consumers have turned to the internet for their grocery needs than ever before. In the US - a country with a high rate of vehicle ownership and a pervasive driving culture - this has often meant that consumers are obtaining their groceries by utilising curbside pick-up service.

Dark stores are expected to become more common across the US grocery industry

With online grocery demand surging, and with many consumers feeling uncomfortable shopping in brick-and-mortar stores, the COVID-19 pandemic has forced many US grocery retailers to take a serious look at a concept that has been around for a while but has been slow to catch on outside Western Europe - namely, dark stores. Dark stores are physical grocery outlets that do not serve walk-in customers.