Why Amazon Buying Whole Foods Might Not Shake Up the Grocery Industry Like You Might Expect
Most U.S. shoppers are fiercely loyal to local food stores, calling them better than online options, according to a new Reuters/Ipsos poll that raises questions about how much Amazon.com‘s $13.7 billion purchase of Whole Foods will shake up the supermarket business.
Shares in Kroger, the largest U.S. supermarket operator, have tumbled 40% from this year’s highs on worries that the newly merged company will be quick to siphon business from traditional food sellers.
Seventy-five percent of online shoppers said they rarely or never buy groceries online, according to the survey of nearly 8,600 adults from Aug. 12 to Sept. 1. Even among frequent online shoppers who make internet purchases at least weekly, almost 60% said they never buy groceries online or do so just a few times a year, according to the poll.
The poll also found that around 60% of all adults said their local food markets win on price, selection, quality and convenience. Online sellers led in those categories with only around 3% of respondents.
“I like to touch everything,” said Beth Hatter, 31, who spends roughly $750 a month on groceries to feed an extended family in Newark, Delaware, and buys a lot of produce.
She shops at BJ’s Wholesale Club, ShopRite, and Food Lion, even though online shopping is an option.
Kristian Guy, 25, passes a Met Foodmarket and an organic grocer that stays open until midnight on the walk to his subway stop in Brooklyn.
“I don’t really need to think about buying food online,” said Guy, who does not want food deliveries spoiling on his doorstep.
Amazon (AMZN) has tried for years to grow its online grocery business, without making much of a dent. Its purchase of Whole Foods (WFM) took its U.S. grocery marketshare from 0.19% to 1.4%, versus 14.46% for Walmart (WMT) and 7.17% for Kroger, according to GlobalData Retail.
The poll shows “brick and mortar is not dead yet,” said Roger Davidson, a grocery consultant, who predicts that the future of food buying will be mix of online and offline shopping.
The Food Marketing Institute and Nielsen expect U.S. online grocery sales to grow from $20.5 billion, or 4% overall, in 2016 to $100 billion, or 20% overall, by 2025.
Still, some respondents are changing or are open to changing the way they use technology to shop.
Fort Lauderdale resident Ashley Vettese, 24, who said she was wary of online retailers’ food quality, uses grocery store apps for coupons. Kirsten Fox, 28, of Albany, Oregon, likes to pick out her own food. But she said she would consider new online ordering/curbside pickup services being rolled out by Kroger and Wal-Mart Stores Inc to avoid taking her young son into crowded stores during flu season.
Loop Capital analyst Andrew Wolf said attitudes toward online grocery shopping could change.
“The fact that few people want online grocery shopping now doesn’t mean they won’t want it tomorrow,” Wolf said.