Tech-savvy millennials shun supermarkets for e-commerce

HEATHER HADDON
October 29, 2016
The Wall Street Journal
Grocers are struggling to lure e-commerce-loving millennials into their aisles amid what experts say is a permanent shift in shopping patterns among consumers.
Baby Boomers used to bring long grocery lists to supermarkets. Now shoppers in their 20s and 30s are visiting supermarkets less frequently than their parents, government records and survey data show. They are spreading purchases across new options, including online grocery services such as AmazonFresh, beefed-up convenience stores and stronger food offerings from omnibus retailers like Wal-Mart Stores and Target.
“I don’t think we’ve seen shopping change so dramatically ever,” said Marty Siewert, senior vice-president for consumer and shopper analytics at Nielsen. “Those things in the past that have been real drivers for grocery in terms of freshness and quality aren’t the key drivers for millennials.”
Consumers between 25 and 34 years of age last year spent an average of $US3539 on groceries, about $US1000 less in inflation-adjusted dollars than people that age spent in 1990, federal data shows.
On average, consumers overall bought $US4015 in food for their homes last year.
The shift away from big grocery bills wasn’t as obvious before the financial crisis saddled millennials with student debt and weak job prospects. Sales at food and beverage retailers rose 3.7 per cent between 2002 and 2007, an analysis of US Census figures shows, while they grew just 2.4 per cent annually from 2008 to 2013.
The more than 75 million Americans born in the 1980s and 1990s are delaying marriage and having children, milestones that lead people to start making big trips to the grocery store.
Ageing Baby Boomers also cut back on grocery-store spending, federal data shows. That is coming during one of the worst slumps in years for food retailers, especially those most dependent on bricks-and-mortar stores.
A slump in prices for staples like meat and eggs has also sparked a margin-erasing price war among supermarkets that, in some cases, overexpanded during the boom times. Average prices for key staples have declined year-over-year for 10 straight months; a slump last topped back in 1960, federal data shows.
To win over the key young consumer group, some supermarkets are testing smartphone apps that customers can use to place their orders in advance and introducing new product lines. Grocers are joining with third-party services such as Instacart, Shipt and UberRush to reclaim millennials before they drift further to Amazon.com or other delivery services such as FreshDirect.
Still, consolidation is likely to continue in food retailing before more millennials have children and return to the grocery store in greater numbers, said Diana Sheehan, of consultant Kantar.
“What they buy may change, but the value is going to come back,” said Ms Sheehan. “It’s just going to be a few years later than expected.”
Additional reporting: Julie Jargon