Buying groceries online: A niche market, or the future of shopping?

As more of us buy books, clothing, even furniture online, will more of us starting buying our groceries that way too?

Grocers are betting we will. Walmart, the world’s largest retailer and Charlotte’s biggest grocer by market share, this week started offering free store pickup for online orders in eight cities nationwide, including Charlotte. Harris Teeter has offered it for 15 years. Representatives of Publix and Food Lion told me this week they’re studying the possibility.

It’s probably safe to say online grocery shopping won’t overtake in-store shopping, especially in Charlotte. You know what you’re getting when you order a DVD boxed set or a new paperback thriller from Amazon. But you can’t squeeze an avocado or sniff a fresh melon from behind a computer screen.

What is certain, though, is the grocery store industry is super-competitive, and some companies are doing whatever they can to give themselves an edge. Grocers are fighting for customer dollars as Americans this year for the first time on record started spending more on dining out than on groceries, U.S. Commerce Department data show.

Home delivery and in-store pickup therefore might become a lot more prevalent as grocery competition heats up, as technology advances and as consumers hunger for convenience. Elsewhere in the U.S., competition is also coming from Google, which said last month it will test grocery delivery in San Francisco and one other city, and from Amazon, which delivers groceries through its AmazonFresh unit in half a dozen major metro areas.

“I still think a lot of grocery shopping will happen in stores, but I would expect the growth of services like this to be pretty good over the next few years,” says Ken Perkins, a grocery store analyst at Morningstar.

Online shopping also may benefit some grocers more than others.

Citing Walmart, independent grocery industry analyst David Livingston says grocery delivery and store pickup services may work better for grocery stores that already offer low prices and that don’t offer an enjoyable “in-store experience.”

Harris Teeter is another Charlotte grocer that offers online shopping. It has offered store pickup for 15 years and delivery for just over four years. At the same time, it has worked to improve its in-store shopping experience – adding wine bars at certain locations, for example.

Danna Robinson, a Harris Teeter spokeswoman, said the grocer will continue to expand its pickup service, called expresslane, as it opens new stores. Expresslane is available in over 168 stores, and delivery is available from 26 Harris Teeter stores throughout the Carolinas.

Analysts say pickup and delivery are just ways to stay competitive and offer customers more options. Furthermore, Morningstar’s Perkins notes, online shopping allows people to compare prices.

“A lot of people are trying it. It’s like a ‘me too’ type of thing,” Livington says of services like grocery delivery and in-store pickup.

Salsibury-based Food Lion, which competes on price with Walmart, doesn’t offer the services yet, though it is “exploring a number of options for both in-store grocery pick-up and home delivery for our customers,” says spokeswoman Christy Phillips-Brown.

When customers order groceries online for delivery or store pickup, however, they’re not spending any time browsing the aisles and presumably buying more.

Lorresa Lafrancis manages the Walmart Supercenter in Mooresville, one of the three area stores where the retail giant launched online order pickup service. She says the service isn’t intended to eliminate one way of shopping.

“There are times when people do want to do their shopping in the stores,” Lafrancis says. “But there are other times when they are pressed for time. We’re just creating options.”

The “most glowing” response to the new service, Lafrancis says, has been from mothers with small children who appreciate not having to load and unload car seats.

Walmart hasn’t disclosed plans to expand the service further into the Charlotte region, though Lafrancis says plans are underway “in the upcoming weeks” to grow into other markets and expand further into markets in which it already offers the service.

Publix, whose slogan is ‘Where shopping is a pleasure,’ doesn’t offer online grocery order pickup or delivery. Analyst Livingston says Publix stores are designed to enhance the experience for shoppers, who probably don’t go there for the prices. The grocer isn’t ruling out the services, though.

“As the industry sees more online and home delivery options become available, we continue to look at and evaluate these options as well as monitor customer feedback,” says spokeswoman Kimberly Reynolds.

Livingston says online grocery shopping tends to work best in areas that are densely populated and where vehicle ownership is low. That probably explains why so many services – including Peapod, FreshDirect and Instacart – compete in New York City.

For a city like Charlotte, where most people drive, “it gets a bit more complicated,” Livingston says. As failed companies like Lettuce Carry show, the grocery delivery business here is a tough one in which to thrive. The Charlotte-based service folded last year after about two and a half years in business.

But Birmingham, Ala.-based delivery company Shipt hopes to resonate with local consumers. It launched service in Charlotte in September with delivery from area Publix stores.

For companies that do offer some sort of online grocery shopping service, though, while it might help them competitively, it may not do much for their overall financial performance.

“I can tell you as far as market share goes, it doesn’t even show up on the radar,” Livingston says.

This story was originally published October 17, 2015 at 4:00 AM with the headline "Buying groceries online: A niche market, or the future of shopping?."