With as many as one in three consumers indicating in a recent Technomic survey that they’re likely to use digital services and apps for food delivery in the grocery space, it’s not hard to picture a future where these types of conveniences are part and parcel of the food industry. Signs of their potential are everywhere, from Walmart testing online grocery shopping with a curbside pickup option to Panera Bread saying publicly that digital ordering could account for 50% of its sales someday like it already does for Papa John’s or Domino’s Pizza.
Investments in customer-facing technology in the food industry will and should continue, but consumers and investors alike should know that the machines aren’t completely taking over. Insights from Technomic’s Retail Innovation Consumer Awareness and Attitudes Survey reveal that consumers don’t consider digital upgrades to be a zero-sum proposition that completely replaces interaction with staff or the in-store experience at a grocery store. Those findings are instructive for restaurant brands considering a similar move toward greater digital sales and online ordering.
The survey asked consumers whether brick-and-mortar grocery stores or online grocery services do certain things better, and many advantages for the analog retailers emerged. The greatest difference was in quality of perishables, which 67% of consumers said brick-and-mortar did better, compared with only 5% for online. Three out of five consumers said traditional grocery stores were better on convenience, while only 13% said so for online grocers. The brick-and-mortar players also earned more than 50% of consumers’ preferences for local community support, knowledgeable and friendly staff, and shopping experience.
Consumers give brick-and-mortar grocery stores the edge over online grocers on many attributes of... [+]
Sure, consumers indicated that online food shopping was appealing in several ways, namely in that it allowed people to avoid crowds and long lines at the grocery store, saving lots of time in the process. But shoppers don’t necessarily save money this way, they told Technomic, and without the ability to interact with market employees at the deli and butcher counters or in the frozen-foods aisle, they feel like they’re missing out on the enjoyable parts of the in-store experience. They’re also less sure they have the information they need to make the best choices for feeding their families. The other key concern in online grocery shopping is a perceived lack of freshness.
These perceptions are startup hurdles for a “sharing economy” app like Instacart, which nonetheless was posting double-digit gains in users week-over-week as it entered major cities like Boston, Chicago and New York. The same could be said for Instacart’s competition from powerhouse online companies like Google and Amazon.com, which also have debuted online grocery ordering and delivery in a few big markets. But this is largely a function of familiarity and trial. These digital players no doubt will be able to scale into new markets with a flood of their own money or venture-capital backing, and the demand for these services will be there.
While only about one in 10 consumers currently uses online grocers, personal-shopping services, call-ahead grocery services, subscription programs or community-supported agriculture platforms, familiarity with these platforms has reached levels between 50% and 70% among consumers. When asked how likely they were to use some of these platforms—either trying them for the first time or using them again if they had already done so—about one in four consumers to one in three reported a willingness to adopt digital food-ordering platforms.
What does this have to do with the future of restaurants? Every kind of chain, from fast food to upscale casual dining, is trying to evolve with the same changing consumer behaviors, which will continue to drive them toward more digital ordering from the Web and mobile apps, self-service kiosks, and convenient delivery or pickup models. Like brick-and-mortar grocery stores, restaurants will become more expensive to run thanks to increasing costs for food, labor and rent.
Digital ordering and delivery of food will certainly grow and command a greater share of food spending, but they won’t completely replace the experience of buying and eating food away from home. There are too many things that people trust and enjoy about grocery stores and restaurants. When consumers come into the store to pick up food they ordered or dine in—which plenty will still do—updated and comfortable décor will be more important than ever. So will staff members who are well-trained on the menu and are hospitable above all.
