Consumer trends: Grocery shoppers show increased appetite for e-commerce

We believe the coronavirus has accelerated secular trends in shopping that were already in motion. Specifically, social distancing has accelerated the shift to e-commerce, driving many consumers to increase their e-commerce utilization and adopt these tools for a broader set of product categories. 

The biggest impact here is the increased adoption of the very large and relatively underpenetrated food and consumables categories. Together, food and consumables represent almost one-third of all US retail spending.¹ Pre-coronavirus, e-commerce represented only mid-single-digit market share of these purchases, but recent data suggests that has likely at least doubled to the low double-digits following social distancing requirements.² We believe the main beneficiaries here are the large e-commerce platforms and meal plan or restaurant delivery specialists.

Across all categories, we have seen e-commerce platforms and specialists gain share to the detriment of brick and mortar retail businesses. While the shift to e-commerce may be experiencing an unusual boost during this period, we believe some level of accelerated adoption may be maintained for the foreseeable future – driving long-term behavioral shifts that may not revert back to prior routines. This is because e-commerce was already taking share through its advantages of convenience, selection, product information/reviews and round-the clock-availability. Further, as share shifts and brick and mortar volumes fall, economic pressure will increase to have fewer stores, thus reinforcing the shift to e-commerce.

But while store-based retail has a natural digital substitute in e-commerce, and may thus feel long-term echoes from this period of social distancing, we believe many consumer-focused experiences are unique and will continue to drive physical excursions in the future. For example, we believe it is unique to eat in the ambiance of a restaurant, gamble in a casino, go to a concert or a movie theatre, experience a museum, or travel to see unique cultures and sites. While many of these experiences have been curtailed or reduced during this period of social distancing, we believe they will recover over time and likely with great momentum once a vaccine is deployed.  In contrast, we are less sure about the recovery of business-related excursions and travel. Social distancing has driven a large migration to digital tools for meetings and conferences, and we believe many companies are beginning to view these tools as equally effective at greatly reduced cost versus business travel. This may lead to a long-term headwind for a full business travel recovery.