Data shows some surprises in online grocery - The Packer

Data shows some surprises in online grocery

08/23/2013 10:35:00 AM
Greg Johnson

Greg Johnson, EditorGreg Johnson, EditorCHICAGO — One of my favorite things about the transition from print-based news to digital is that we know so much more about our readers.

Of course print still has value, but we never know for sure when, how much or how many of our subscribers are reading. But online, we know just about everything: when they clicked on a story, how long they read it, where they came from, where they went, what kind of device they read it on, etc.

Some findings were exactly as we expected at The Packer, but some were unexpected, and it has changed the way we cover the news of the produce industry, such as making our stories easier to read on smartphones.

The same is true of consumers buying groceries.

Retailers know so much more about consumers when they order online.

Online retail workshop

I had a lot of my preconceived notions challenged at the Aug. 20 workshop “Competing in the Online Retail Market” at our second-annual Midwest Produce Conference and Expo in Chicago.

I moderated the panel that featured Bill Bishop, chief architect of Barrington-based Brick Meets Click and Willard Bishop Consulting; Drew Schwartzhoff, Eden Prairie, Minn.-based C.H. Robinson’s director of marketing and sourcing; and Tony Stallone, vice president of merchandising and food safety for Skokie-based online grocer Peapod, a subsidiary of Royal Ahold, Netherlands.

I figured hearty produce items would be most popular, but Stallone said strawberries in 1-pound clamshells are the No. 6 most purchased item online by units and No. 1 by dollars.

Also by dollar sales, organic strawberries, yellow bananas (as opposed to green) and red seedless grapes were ranked 5-7.

Stallone said consumers trust that stores will deliver good-quality items, which I did not expect.

He also said organic produce sales online continue to grow. In 2012, organic made up almost 23% of all produce sales for Peapod, compared to about 5% of overall produce sales.

Another statistic that surprised me was that the average online order was more than $160.

All these things surprised me until I thought about them a little more critically. If I lived in a big city and ordered groceries online, I would certainly include fresh produce, and I’d probably buy a lot.

In fact, one attendee who I talked to after the workshop said, as a New Yorker, she often makes huge online grocery orders, like over $300, because the delivery fee is the same no matter the size of the order, and it’s so difficult to carry groceries on the train, so that’s how she stocks up.

Competition

Traditional retailers have reason to consider online grocers tough competition, but Schwartzhoff gave the most comforting figures from a CHR internal poll of produce buyers. He said more than 7 out of 10 consumers said they want their brick-and-mortar store to do the online job.

“But 10 years ago if we’d have asked this about buying books, they wouldn’t have said Amazon,” Schwartzhoff said. “They’d have said Borders, so we’re not immune.”

Pete’s Fresh Market

Retail Editor and Editor of Produce Retailer magazine Pamela Riemenschneider said after moderating last year’s consumer panel, in which several praised Pete’s Fresh Market, that she was looking forward to hosting a visit to Pete’s on our retail tour.

I have to admit, I was too.

And it was worth it.

I’ve been to produce departments that have been more dramatic, with fun displays and unique items, but for sheer size and quality, the first suburban Pete’s market (the company’s ninth overall and first outside Chicago city limits) may have been the best produce department I’ve ever visited.

Vanessa Dremonas, daughter of founder Pete Dremonas, gave our group the tour on Aug. 21, and she stressed the produce department looks like that every day, not just when tours come through.

She said her father is a produce man, so he takes great pride in having abundant displays all the time.

She also said the company’s goal is to keep prices at a level that allows middle-class consumers to shop there.

“We strive for keeping it below Whole Foods prices, even though it looks like this,” she said.

For the most part, that was true. But I did note some organic Pink Lady and granny smith apples from Chile priced at $3.49 a pound, which works out to about $2 for an apple.

That’s a little too steep for me.

But I’m an educated shopper, and I know good fresh produce values, and I know I would shop at Pete’s if I lived in Chicago.

gjohnson@thepacker.com

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