Laker prof's research shows big market gains for grocery delivery - oswegocountynewsnow.com

Editor’s note: The following piece was submitted by SUNY Oswego journalism student Riley Kennedy. The Palladium-Times welcomes content pitches from student journalists at editor@palltimes.com

OSWEGO — Research and analysis from SUNY Oswego professors shows during the height of the coronavirus pandemic, consumers adapted to the new social and economic reality with a massive increase in the use of online grocery services.

Use of services like Instacart and Amazon Fresh have seen a significant increase since the mid-March closure of non-essential businesses and severe restrictions of restaurant operations due in part to an executive order by Gov. Andrew Cuomo.

A main concern in some parts of the country affected by COVID-19 and the associated regulations was how people were going to get groceries with stores closed or operating at reduced hours. Fear or uncertainty about venturing out themselves has led shoppers to turn to the internet, according to SUNY Oswego marketing professor Yiru Wang, whose recent paper “COVID-19 and Retail Grocery Management” gleans insight from a “broad-based consumer survey.”

“I believe the future of online grocery shopping industry will be booming,” said Wang. “The competition is really intense nowadays.”

Wang surveyed 2,500 people regarding their online grocery shopping and says over half of respondents said during COVID-19 they learned the skill of online grocery shopping.

According to a report by Bain & Company, online grocery sales roughly tripled during the teeth of the pandemic: Before COVID-19, the Bain data said, only 3 percent to 4 percent of grocery sales in the U.S. were online; now, anywhere from 10 percent to 15 percent of grocery sales are done via the web.

The appeal of these services is obvious: with uncertainty about store operation and fear of contracting or spreading the virus, to have food, beverages and other supplies delivered to one’s front door seem like the best of both worlds. The researchers found, however, that it wasn’t a perfect system.

Learning how to shop for groceries online came as a struggle for some people, the report said, because some stores sold out of groceries and users came to find out what they ordered didn’t always end up in the bag when they picked up their groceries.

“Many of the items we ordered online turned out to not be available and there were a lot of substitutions and in some cases, the substitutions weren't available either,” said Vance Marriner, the current research director at Business Journal News Network, who is a professor at the SUNY Oswego business school.

Although some people did not get exactly what they wanted, sales in the online grocery shopping industry have been steadily on the uptick. In an online grocery sales survey conducted by the service Brick Meets Click, for the month of March sales accumulated $4.0 billion and April sales rose to $5.3 billion. The trend continued as May sales hit $6.6 billion, and June wrapped up at $7.2 billion in sales, according to Digital Commerce 360.

There’s good reason to believe revenue from the online grocery sales industry will be a driving force for entrepreneurs for years to come but as with all emerging technologies, investors should keep an eye out for a market bubble.

In a study by the Food Marketing Institute conducted by Nielsen projected online grocery sales would reach $100 billion and make up as much as 20 percent of total grocery retail by 2025, according to CNBC.

Marriner said he believed people who weren’t shopping for groceries online before the pandemic will continue to do so.

“Making any projections at this point is extremely difficult because so many factors remain in flux. For one thing, the pandemic is still going on and we don't know when it will end,” Marriner said.