If you’re like most Americans, you or someone in your household made a run to the grocery store on Saturday to get food for the week.

If you lived in the Northeast, you were also there to stock up on the three things that everyone always buys when big snowstorms are expected — our third big storm in as many weeks (for those of you not keeping score like we are here in Boston).

Like most grocery shoppers, you already knew most of the things you were going to buy before you even got there — roughly 75 percent of grocery shoppers do. Although your favorite grocery store probably has a loyalty program and offers digital coupons, that probably isn’t why you like shopping at that store. In fact, fewer than 20 percent of all grocery shoppers say they chose a grocery store for that reason.

Like most consumers, your favorite store is probably your favorite because it’s easy and convenient to get to, has good prices and is where you’ve always shopped — a sentiment that nearly 90 percent of all grocery shopping consumers in the U.S. share.

As for using a mobile app before and during that trip?

That depends on where you shop and whether your top pick is a big store — Walmart, Target, Albertsons, Kroger, Whole Foods — or a Bi-Rite, JustSave, Luckys Market, Town & Country Market or one of the thousands of smaller format stores that dot the grocery landscape in the U.S. and often don’t even have an app.

About three in 10 grocery shoppers use a store’s mobile app as part of their grocery shopping process to check prices and see what’s on sale if they shop in a big store — only one in 10 do so if their go-to is a smaller store.

Whether you might have used the app to pay for your order depends on whether you went to the store to shop and to pay — or just to pick up what you ordered earlier online — and what you value most from your favorite store.

All those data points — and the insights they yield — are just some of things we learned when we, in collaboration with Vantiv, now Worldpay, asked about 4,000 consumers how they shop and pay for groceries today and how well their favorite grocers are doing to support the features they value most when shopping with them.

The short answer is: not all that well.

The gulf between what consumers want and what grocery stores today deliver as consumers move regularly between the online and offline worlds is pretty big. On a scale of zero to 100, where zero is, well, zero, and 100 is a perfect score, grocery stores scored a pretty lousy 30, based on consumer responses and a statistical analysis of store features and functionality.

That sets the stage for change.

Habit is the force that drives the majority of grocery shopping behavior today — consumers buying what they usually buy, where they’ve always done it.

But a funny thing is starting to happen at the intersection of the consumer’s frequency of food shopping, their level of spend when doing it and their access to connected devices and apps.

Old consumer habits are starting to break, and new ones are starting to form.Spend on groceries is starting to fragment and shift across channels — and not necessarily across different channels with the same merchant. Consumers use mobile phones and apps, and increasingly voice assistants, to help maximize their time, putting them closer to the brands they want to buy and new intermediaries from which to buy them.

All this is forcing grocery stores to confront what it means to offer consumers convenience and value — as consumers now define it.

 

The Big Spend

Food is a big part of consumer spending, accounting for more of the typical consumer’s annual spending than most anything else, except for housing and transportation. In 2017, that amounted to 12.6 percent of what American consumers spend every year — about $7,203 according to the U.S. Census Bureau. More than 50 percent of that spending — $4,049 — was on food bought at grocery stores to eat at home.

That spend is typically done about 1.5 trips a week, mostly at a brick-and-mortar grocery store.

That’s starting to change — slightly — but in significant ways.

More than half of all consumers we studied — 55 percent, in fact — said they use both online and offline channels to buy their groceries. Only 41 percent of consumers said the only way they shop for groceries now is by going to a physical store.

Roughly 3 percent of these consumers said they buy their groceries online and pick them up at the store, and — hold on to your hats for this one — 8 percent order their groceries online and have them shipped home.

All of this has a big influence on what consumers now say they expect from their favorite grocery stores.

Even though a lot of feet still visit grocery stores to buy food, not many see the value in using an app to pay for them when they’re ready to checkout; only about 4 percent said that’s important, which is consistent with what we found in our mobile wallet adoption study. What they value more — and by a lot — is the ability to use an app to buy and pay online, with either delivery or store pickup as an option when paying that way for securing the items they purchased.

In fact, more than 53 percent of consumers said the feature they valued the most from their favorite grocery stores was free shipping and/or delivery.

Good prices are table stakes, a given.

The most convenient location of all for a consumer now seems to be her home — or the trunk of her car when pulling up curbside. With 55 percent of consumers now shopping comfortably across physical and online channels, it’s a measure of convenience that could dent traditional grocery store business and its profits — enough to hurt more than a little as consumers use mobile apps to cherry pick where to buy the things they want to buy at the cheapest price, now paired with the most convenient way to get them.

 

The Dash to Capture Grocery

It will come as no surprise that one particular newcomer to grocery, located in Seattle (but hopefully moving to Boston soon), is the biggest catalyst of this change in consumer thinking.

I’ve been talking about the Amazon Effect on grocery since April 2015, shortly after the Amazon Dash button was launched.

Back then, the ability for consumers to stick funky-looking little plastic buttons on their washers and dryers and inside their kitchen and bathroom cabinets to order branded supplies like paper towels, toilet tissue, potato chips and dog food when supplies were running low put grocery stores on notice that change was coming.

Early Dash adopters saw a way to remove the friction from buying — and hauling back home — the same bulky staples week after week by having Amazon deliver it to Prime customers for free in two days instead. (The $4.99 for each button was refunded once an order was placed.)

The consumer brands that were the early adopters saw it as a new way to develop a relationship with consumers outside the traditional grocery store format. The product that everyone thought was an April Fool’s joke was popping up for just about everything.

Dash buttons today have evolved from funky-looking, plastic doodads to digital prompts for subscription ordering on Amazon’s site — for everything from makeup to hand cream to laundry detergent to dog food and much more.

More than anything else, those Dash buttons — physical and digital — started a new consumer habit: the ability to order things consumers always buy (and once always bought at the grocery store) online from Amazon.

The joke, it turned out, was on the grocery segment.

Hitting a Fever Pitch

The topic of grocery shopping — and how consumer shopping patterns were shifting — hit a fever pitch last June when Amazon announced it was buying Whole Foods. That was when visions of the “Amazon Effect” landed a sucker punch to the stomach of a retail segment that once thought of itself as insulated from its reach.

But even then, the talk was what might happen “down the road.”

After all, the fraction of the $1 trillion in US grocery sales, counting Target, Walmart and Costco, that Americans spend online is little more than a speck on a flea’s eyelid right now — at about 1 percent. That online sales data comes courtesy of two-year-old U.S. Census Bureau data, which we know to be inconsistent with the reality of what’s happening in the world of retail — and should be of about as much comfort to grocers as it is to department stores that are still being told by the Bureau to believe that 92 percent of retail sales still happen in a physical store.

Then there’s the reality of the combined grocery market share of Amazon and Whole Foods, which together in 2017 amounted to a mere 2.5 percent. Walmart/Sam’s Club together hold a 20.7 percent share of grocery sales. Kroger, the largest traditional supermarket in the country, is a distant second at 8.4 percent.

But like a lot of retail that’s come face to face with the Amazon Effect, grocery stores have taken it on the bottom line ever since the announcement was made that Amazon would acquire Whole Foods.

Kroger’s earnings last week only raised analyst concerns over the Amazon Effect on Kroger and the grocery segment at large, evidenced by the drubbing its stock price took after Kroger CEO Rodney McMullen cautioned that future profits could soften.

He said then that further investments in tech as part of the Restock Kroger initiative announced last October would mean profits would take a hit. Those investments include everything from beefing up the retailer’s private label brands to being more price-competitive on individual grocery items to investing more into its online order, pick-up and delivery capabilities.

The latter — online order/pickup and/or delivery to shoppers — was a big theme when Walmart CEO Doug McMillon told analysts last month that the company was “doubling down” on its investments in grocery to include the expansion of curbside pickup to 2,000 more stores in 2018.

Target CEO Brian Cornell reprised a similar sentiment last week when describing the retailer’s plans for Shipt, the personal shopper plus same-day delivery Instacart competitor it acquired last year.

At the same time, Amazon announced an unprecedented guarantee of $22 billion in food futures to Whole Foods, which analysts said was an indication of the company’s commitment to growing the grocery segment and boosting the fortunes of Whole Foods as the horse it picked to ride into that sector.

Taken all together: It’s just further evidence of the looming threat, as the 55 percent of consumers who once only bought groceries in a physical store now play the field, moving seamlessly between on and offline grocery shopping channels — and quite possibly not buying from the same grocery store when they shop across those channels.

The two consumer habits that were once the local grocery store’s greatest blessing could turn into their  biggest curse.

Unlike most every other retail segment, consumers buy most of the same stuff week after week — brands they know, products they like, quantities they use. Of the nearly 40,000 SKUs (stock keeping units) in any given large format grocery store, the average consumer usually buys about 260 of them. With the exception of meat and produce, most are things consumers don’t need to see and inspect to feel comfortable buying — and are buying at great prices.

The big winners in the grocery wars are the consumers who have seen grocery prices remain low for a very long time. So low, in fact, that many consumers have shifted a portion of their spend on eating out to buying groceries and prepared foods at grocery stores and eating in. Restaurant industry analyst NPD said foot traffic to fine dining and casual/fast casual establishments was down last quarter for the first time, while traffic to casual and fast casual establishments has been off for a very long time.

Record low jobless rates, higher wages, strong consumer confidence — all of this suggests consumers are making dinner at home more of a priority. It’s why grocery stores like Walmart, Wegmans and Whole Foods are making prepared foods more of a priority in the hopes of bringing more traffic into the store and tempting consumers to buy more while there.

The Amazon Effect on all retailers is about raising the expectations consumers have of the merchants they shop. For grocery stores, it’s about that, with a turbo-boost. In many cases, it’s about making it easier to get the exact same thing they’d otherwise spend 45 minutes going to the store every week, sometimes dragging the kids along, to buy.

It’s why Walmart paid $3 billion for Jet.com, and Kroger was willing to pay $400 million to buy Boxed.

Retaining the consumer’s business isn’t about loyalty programs or even coupons. People would rather have cheaper prices than go through the rigmarole of keeping track of digital coupons at checkout and the fear of missing out if they don’t.

It isn’t about having an app that can only be used to pay inside a store and not do much else in the way of adding value to the overall grocery shopping experience.

It’s truly about being an omnichannel merchant — making it convenient for the consumer to buy things wherever they want to buy them and to get them whenever and however they want them.

The implications for grocers — and the ecosystem that supports them — seems clear.