Facing a surge in demand, grocery stores adapt pickup and delivery services

Stay-at-home orders issued by state governments across the country created a sudden and immediate surge in demand for grocery pickup and home delivery services. The grocery retailers weren’t quite ready.

The Target.com website now states: “Due to high demand, items may be unavailable or delayed.” Walmart.com’s site explains next-day delivery is “temporarily on hold, due to high demand.” E-commerce giant Amazon is warning of delivery delays. O’Hara-based Giant Eagle also cautions on its website of delays or a lack of pickup time slots because of the high volume of orders.

“The short-term issues we’re seeing are that, even with a lot of investment, stores just weren’t ready for this amount of simultaneous demand,” said Jennifer Bartashus, an analyst for Bloomberg Intelligence. “I think they’re doing an admirable job in difficult circumstances.”

High demand is no exaggeration.

Online sales through pickup and delivery for the past 30 days grew 233% (from $1.4 billion in August 2019 to $4 billion) in March 2020, according to Barrington, Ill.-based advisory firm Brick Meets Click.

Almost a third of U.S. households — about 39.5 million — have used an online grocery delivery or pickup service during the past month, according to the Brick Meets Click/ShopperKit Online Grocery Shopping Survey conducted two weeks ago.

And they’re getting more than almond milk and free-range eggs.

“These customers were not just looking to buy a few items online that they could not get at their regular supermarket,” the firm said, noting that the average online spend per order was $82.

Grocers are trying to adapt to meet the demand.

Target has been adding more spaces in its parking lots for its “Drive Up” service. In addition to hiring more workers, the delivery company Shipt, which is owned by Target, has introduced an early delivery option allowing orders to be filled anytime between store opening hours and the end of the requested delivery window.

Instacart, which delivers for Shop ‘n Save, Aldi, Costco Wholesale, CVS Pharmacy and others, said customer demand has spiked by 300% year over year. It also has hired more active shoppers — a jump from 200,000 to 350,000.

On Wednesday, Instacart launched two product features with the aim to speed up service and unlock more delivery windows: “Fast & Flexible,” which matches the order to available Instacart shoppers, and “Order Ahead,” allowing customers to schedule up to two weeks in advance, rather than one week.

On March 15, grocery delivery apps saw record downloads, according to Boston-based Apptopia Inc. Compared with average daily downloads in February, Instacart, Walmart Grocery and Shipt saw surges of 218%, 160% and 124%, respectively.

Some chains have even converted some physical stores into pickup-only destinations.

Giant Eagle has temporarily turned one location in Akron, Ohio, into a fulfillment center for pickups and deliveries, as did Kroger with one of its stores in greater Cincinnati.

Giant Eagle is planning to convert another store in northeastern Ohio soon, but it’s still evaluating whether the same logistics would work in Western Pennsylvania, said Jannah Jablonowski, a spokeswoman for the O’Hara-based company.

“There has really been an unprecedented demand in curbside pickup and delivery,” Ms. Jablonowski said. The company had been developing the service over several years.

“We introduced curbside in 2012 in Pittsburgh and had seen interest in the service grow as people adopted the idea of someone else shopping for them,” she said. “It’s been a steady increase and we’ve been on top of that and able to forecast that.

“So to have this sudden surge, honestly, it’s challenging.”

Giant Eagle, too, has been hiring more shoppers to handle orders, which will free up more availability. The grocer has been increasing ordering slots every week by about 1,000 and grown overall pickup/delivery capacity by about 25% in the Pittsburgh area, she said.

While orders may be spiking, the overload on the systems may not be creating a great first impression. Brick Meets Click found that about 43% of its survey respondents were “either extremely or very unlikely” to continue using a specific grocery service after the COVID-19 crisis ends.

But the firm isn’t pessimistic.

“What’s significant now is that all these new 20 million households have taken the first and hardest step towards becoming regular online grocery shoppers, i.e., they’ve tried it once,” Brick Meets Click wrote in a blog post. “These customers make up a large pool of potential shoppers that are now ‘in play,’ to be won by the food retailers who provide them with the best experience going forward.”

Ms. Bartashus sees new shopping patterns forming.

“I think that when we come out of the pandemic there will be a permanent shift in the grocery landscape,” she said. “The longer people are under constraint, the more reliant they can become and keep that pattern going after things return to normal.”

In the meantime, Pete Banzanos, eMarketing manager, Shop ‘n Save Pittsburgh Merchandising, said it’s important to be patient.

“There’s a huge demand and everyone is working hard to meet that,” he said. “Be patient and be safe.”

This article was originally published on post-gazette.com