Rabobank, a leader in global food and agriculture financing, has published the report, Will Consumers Stick with Online Grocery? In it, Rabobank analyzes the long-term impacts of COVID-19 on the penetration of online grocery, offering context to retailers and brand owners as they contemplate how to invest in the future of their businesses.

“We built a simple model to project quarterly online grocery sales in the United States through 2021,” said Bourcard Nesin, beverage analyst, Rabobank, in a press release. “While our model suggests that a wide range of outcomes are possible, we feel the direct, long-term impact of the pandemic on U.S. online grocery sales will be fairly modest, with the most likely scenario leading to a 12- to 18-month acceleration in online grocery penetration compared with a scenario in which the pandemic never occurred.”

Online grocery sales were 3.1% of total grocery sales at the end of 2019. Depending on several factors, online grocery sales could represent anywhere from 4.8% to 9.1% of total grocery sales by the end of 2021.

The pandemic forced millions of consumers to order groceries online for the first time. Rabobank explains that getting that first order is the biggest hurdle for growing the online grocery business. “For retailers, this represents a massive customer-acquisition opportunity, and the biggest opportunity they will ever have to take a lead in the omnichannel world,” wrote Nesin in the report.

While overall grocery sales have started to drop from the heights of March’s stock-up boom, online sales have been much more resilient. Instacart, Albertson’s, Target, and Costco have experienced 450%, 374%, 282%, and 85% April year-over-year growth, respectively. However, the surge in demand for online grocery services revealed the current limitations in retailers’ technical and logistical capabilities.

“We had some periods in the quarter when we saw as much as 300% growth rates with the [online grocery] pickup business,” said John Furner, CEO, Walmart U.S., as reported in The Wall Street Journal. “We slowed our pickup business while we focused on replenishing and restocking stores, then we quickly added back pickup slots. We’re at the highest slot level we’ve ever been, and we are still looking for more ways to innovate to either add more stores or more slots per store.”

The question becomes this: Will the growth in online grocery services remain after the pandemic fades? According to Nesin, “even if overall online sales revert to the baseline scenario, retailers that took assertive action during the height of the pandemic will not only have had a much larger peak growth than the industry at large, but will be able to deliver the kind of user experience that will help them retain these customers in the long term.”

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