Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stocks Bull Market Smoking Gun - 25th May 24
Congress Moves against Totalitarian Central Bank Digital Currency Schemes - 25th May 24
Government Tinkering With Prices Is Like Hiding All of the Street Signs - 25th May 24
Gold Mid Tier Mining Stocks Fundamentals - 25th May 24
Why US Interest Rates are a Nothing Burger - 24th May 24
Big Banks Are Pressuring The Fed To Losen Protection For Depositors - 24th May 24
Another Bank Failure: How to Tell if Your Bank is At Risk - 24th May 24
AI Stocks Portfolio and Tesla - 23rd May 24
All That Glitters Isn't Gold: Silver Has Outperformed Gold During This Gold Bull Run - 23rd May 24
Gold and Silver Expose Stock Market’s Phony Gains - 23rd May 24
S&P 500 Cyclical Relative Performance: Stocks Nearing Fully Valued - 23rd May 24
Nvidia NVDA Stock Earnings Rumble After Hours - 22nd May 24
Stock Market Trend Forecasts for 2024 and 2025 - 21st May 24
Silver Price Forecast: Trumpeting the Jubilee | Sovereign Debt Defaults - 21st May 24
Bitcoin Bull Market Bubble MANIA Rug Pulls 2024! - 19th May 24
Important Economic And Geopolitical Questions And Their Answers! - 19th May 24
Pakistan UN Ambassador Grows Some Balls Accuses Israel of Being Like Nazi Germany - 19th May 24
Could We See $27,000 Gold? - 19th May 24
Gold Mining Stocks Fundamentals - 19th May 24
The Gold and Silver Ship Will Set Sail! - 19th May 24
Micro Strategy Bubble Mania - 10th May 24
Biden's Bureau of Labor Statistics is Cooking Jobs Reports - 10th May 24
Bitcoin Price Swings Analysis - 9th May 24
Could Chinese Gold Be the Straw That Breaks the Dollar's Back? - 9th May 24
The Federal Reserve Is Broke! - 9th May 24
The Elliott Wave Crash Course - 9th May 24
Psychologically Prepared for Bitcoin Bull Market Bubble MANIA Rug Pull Corrections 2024 - 8th May 24
Why You Should Pay Attention to This Time-Tested Stock Market Indicator Now - 8th May 24
Copper: The India Factor - 8th May 24
Gold 2008 and 2022 All Over Again? Stocks, USDX - 8th May 24
Holocaust Survivor States Israel is Like Nazi Germany, The Fourth Reich - 8th May 24
Fourth Reich Invades Rafah Concentration Camp To Kill Palestinian Children - 8th May 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Online Grocery Shopping Will Go Mainstream as Soon as This Year

Companies / Retail Sector Apr 17, 2019 - 02:54 PM GMT

By: Stephen_McBride

Companies

—and These 2 Stocks Will Rake In Bill

Americans spend more money on groceries than anything besides housing.

The American grocery market is also 3X bigger than ALL of the online retail market. In other words, we spend 3-times more money on groceries than we do buying stuff over the internet.

Yet almost none of it happens on the internet.

You can see on this chart that a tiny 2% sliver of total grocery sales in America happens online:




And there’s been virtually no disruption in groceries over the last 60 years.

Most suburban Americans still drive to the grocery store. We still push a cart up and down the aisles. We still place our items on a conveyor belt at the register.

It’s pretty much the same as it was in the 1960s.

But my research shows the monster grocery market is finally about to be turned on its head.

Amazon Has Set Its Sights on Groceries

Until recently, even mighty Amazon has been stumped by groceries.

It rolled out grocery delivery service Amazon Fresh back in 2007. Since then Fresh has lost money every year.

After a decade of failing to turn a profit, Amazon folded Fresh in most US cities in 2018.

In 2017 it set out on a new path. Amazon bought the Whole Foods supermarket chain for $13.7 billion.

Whole Foods is the largest natural and organic grocery chain in America. It operates roughly 470 stores around the country.

Acquiring Whole Foods is Amazon’s first step into physical grocery stores.

In the next two years, it plans to open 3,000 “Amazon Go” stores in the US, according to Bloomberg.

Amazon Go stores are Amazon’s “checkout-free” stores. They completely remove the time-consuming checkout process.

You walk in, scan your phone to verify who you are, pick up what you want, and walk out.

By the end of 2019, Amazon will have a grocery store within 20 miles of 70% of the American population...

This solves the biggest problem with online groceries: delivering fresh produce to skeptical customers.

In a 2019 eMarketer survey, 90% of shoppers said they’d buy groceries online from their current grocery store.

Just 4% said they’d buy from an “online only” grocer.

In other words, people are open to having their groceries delivered.

But they don’t want to have milk and meat shipped to them from some warehouse 50 miles away. They want to buy groceries from companies they trust with a local physical presence.

America’s Biggest Grocer Is Moving Online Too

Walmart (WMT) sells roughly one-fifth of all groceries in America.

With 5,300 stores in the US alone, it already has a store within 10 miles of 90% of American households.

Roughly 95% of Walmart’s sales happen in its physical stores. But over the past three years it has plowed $20 billion into efforts to step up its online presence.

That’s helped it to become the third-largest online retailer in America behind only Amazon and eBay.

By the end of this year, same-day grocery delivery from Walmart will be available to 60% of US households.

That’s 195 million people who can choose to have their weekly shopping delivered to their doorsteps.

Many Grocery Chains Are in Big Trouble

Just 2% of the $1.5-trillion grocery market is online today. But as Walmart and Amazon go all-in, this should jump to around 20%.

That’s 10X growth. And it’s coming much faster than you might expect.

By the end of this year, more than 80% of Americans will have access to online groceries.

Meanwhile, many smaller grocery chains are at risk.

A study from consulting firm Oliver Wyman found that if just 8% of the grocery market moves online, one-third of all grocery stores will shut their doors.

You see, small grocers tend to be fragile because they survive on razor-thin margins.

The average net profit margin for grocery stores is just 1.9%. As I mentioned earlier, they make less than $0.02 in profit for every dollar of sales.

With such slim margins, even a small dip in sales can ruin their business.

Amazon and Walmart are two of the biggest, most powerful companies on earth. They’re like a couple of 800-pound gorillas marching in on small grocers’ territory.

There are 11 publicly traded grocery stocks in America. A tidal wave of disruption is about to hit all of them.

Some will end up like Borders, RadioShack, and Toys “R” Us: bankrupt and in retail heaven.

We're in the early stages of a big shift in the way people buy groceries.

Remember: Groceries are the largest consumer market in America. And the least amount of spending in this market occurs online.

It’s shaping up to be a disruption investor’s dream.

By Stephen McBride

http://www.riskhedge.com

© 2019 Copyright Stephen McBride - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in