‘Grocery wars’: How local stores are competing for your dollar

Large and small stores fighting to stay ahead of Amazon in grocery industry.

Area grocery stores are racing to provide customers with improved services and technology as more take advantage of online shopping.

It’s created a “grocery war” among the largest and smallest in an industry that produces $682 billion a year for local economies, according to the Food Market Institute. About 4.8 million people were employed by the industry in 2017.

Kroger, Walmart, Meijer and others already offer online shopping and home delivery in the Cincinnati area, but industry experts say this won’t be enough to compete with Amazon in the field.

Since Amazon purchased Whole Foods for almost $14 billion in August 2017, there has been a significant shakeup in the grocery industry. While the online giant and Whole Foods don’t have a major footprint in the Cincinnati area, local grocery stores have started following the trend to offer a larger online presence to keep up with a quickly growing online industry.

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Online grocery shopping is expected to reach $100 billion in worth as early as 2022. While 60 percent of shoppers currently prefer to shop in stores, about 70 percent of shoppers will occasionally shop online for their groceries by that year.

Only 2 percent of grocery sales are currently online, but Brittain Ladd, a grocery analyst and former digital, supply chain and strategy consultant for Cincinnati-based Kroger, expects that number to reach 20 percent by 2025.

Both a physical and online presence are important moving into the future of grocery, Ladd said.

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“Grocery shopping is very personal for most people,” Ladd said, especially when it comes to products like dairy, meat, fruits and vegetables that customers want to “inspect and select.”

Grocery stores have worked to convince customers that they can pick the freshest and highest quality items through the use of personal shoppers, who will begin to understand exactly what each customer wants the more customers order.

The successful grocery store will be the one that can convince a customer that their pickup or delivery will have the perfect product every time, Ladd said.

“Until that happens, especially on items most personal to the customer, they’ll continue shopping for that on their own,” Ladd said.

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Yet several Southwest Ohio shoppers said they’d consider delivery under the right circumstances.

CharAnn Barbadora said she’s never used delivery before, but she would consider it in the near future.

“I don’t have a car, and I’m in a retirement home,” the 84-year-old said.

Barbadora has someone willing to take her to grocery stores but recognizes the convenience of delivery services.

She said she is not worried at all that she won’t be able to inspect the freshness and expiration dates of her fruit, and fully trusts the stores to provide the best product.

Couple Samy, 27, and Josh Warn, 33, also haven’t used any technology for delivery yet but have considered it in the past. They believe within the next several years they will begin using the service as their preferred grocery shopping method.

“It’s just the convenience I think,” Sami said. “The ease and knowing that everything could be delivered would be nice.”

In-store pickup

Kroger, the largest grocery provider in the Cincinnati and Dayton areas, has offered its ClickList online ordering service since 2014, but increased the program’s footprint to over 1,000 locations by December 2017.

ClickList allows customers to park their vehicles outside the stores and have an associate load their grocery orders. Many of the dozens of Kroger locations in the Cincinnati area offer ClickList services.

Walmart is also taking steps in the area to make online ordering and in-store pickup even easier. The company has constructed nine 16-foot-tall vending machine style Pickup Towers in Ohio, including in Middletown, Fairfield Twp., Franklin and Lebanon.

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After ordering on the app, customers can scan a barcode to retrieve groceries from the machine. Walmart has also started offering curbside pickup.

Target in June announced the expansion of time-saving pickup service Drive Up across the Midwest and Southeast, including in the Cincinnati area. The service where team members bring online orders out to guests’ vehicles, usually within a couple of minutes.

Pickup service is rapidly growing with availability in 270 stores throughout the South and Southeast United States. The company plans to offer the service at nearly 1,000 stores by the end of 2018.

Even smaller retailers like Dorothy Lane Market with locations in Warren County’s Springboro, as well as two Dayton area locations are getting a piece of the action. In February 2017, the company launched DLM Drive-Up, allowing customers to pick up groceries ordered on the company’s website.

Delivery

With Amazon’s free two-hour Whole Foods delivery for Prime members in many cities including Cincinnati and Columbus, and an intent to increase its market share, traditional brick-and-mortar grocery stores have jumped into delivery. Local grocery stores have partnered with companies like Shipt and Instacart to offer the service.

Whole Foods does offer delivery in Cincinnati through Instacart, an online same-day delivery company.

Kroger also used Instacart to move into delivery, with the grocery service delivering straight to customers’ front doors from 1,200 of its 2,800 stores, including several in the Cincinnati area. Through its merger with Home Chef, the country’s largest private meal kit company, Kroger now also delivers prepared kits to customers’ homes.

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The company has shown an innovative vision for the future of grocery with last month’s announcements that it will test self-driving delivery vehicles and open a second headquarters in Cincinnati to hold its digital team.

Aldi stores also offer pickup and delivery through Instacart, with the website saying some Butler County ZIP codes are coming soon.

Target acquired Shipt, a same-day delivery company in December. The company expects the service to be available at the majority of Target stores this year.

Meijer also utilizes Shipt to offer home deliveries. What started for the company as delivery in three cities turned into 200 total stores, including Cincinnati.

Staff Writer Eric Schwartzberg contributed to this report.

BY THE NUMBERS

10: percentage of retail purchases that are online

2: percentage of grocery purchases that are online

$13.7 billion: Amazon’s payment for Whole Foods

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