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Barron’s has a story about how “online grocery sales are going to be the future of the supermarket,” even though it hasn’t caught fire - “even among tech-savvy millennials” - yet.

The story quotes Loop Capital’s Anthony Chukumba, who “took a look at the online grocery space Monday, writing that while sales are projected to reach $100 billion by 2020 and account for 12% of total food and grocery revenues in the U.S., tech-loving millennials haven’t fully embraced this option.”

At the same time, Fortune has a story about a new Bain & Co.-Google survey saying that “just 3% of grocery spending in the U.S. takes place online, compared to much higher levels of e-commerce penetration in areas such as footwear (20%) and consumer electronics (40%). Only 25% of those surveyed tried an online grocery service in the last year and just 6% have consistently ordered groceries monthly online.”

Consumers say that the slowness in this segment comes because “some shoppers are concerned about determining the best prices when shopping online, while others complain about items being out of stock or delivery drivers being late.” Plus, “while grocery delivery is intended to save time for consumers, only 42% of those surveyed said the service did so.”

However, despite the to-date performance issues, “Bain expects that groceries will be part of e-commerce growth, which in total is expected to at least triple in the next decade,” though “online grocery retailers will need to become even more convenient and incorporate features such as shopping lists and price comparison to convert consumers.”

In the Barron’s story, Chukumba argues that “millennials are a key group to watch … given that the cohort’s collective annual spending will reach $1.4 trillion by next year, reflecting 30% of all retail sales. At the moment, though, more than 80% of the millennials he surveyed reported never ordering groceries online, a sign that the returns on retailers’ investments in the area are low.”
KC's View:
But that also means that there is an enormous upside, especially as millennials’ behavior in the grocery sector begins to catch up to their behavior in every other retail segment. It also is going to be driven by the increased competitiveness among a bunch of companies not named Amazon, as they improve their strategies and tactics.

Improved technology and expanded adoption will only give the trend greater momentum. As we see companies focus on things like automatic replenishment at the consumer level and the Internet of Things, as well as improving their delivery of services like BOPIS (Buy Online, Pickup In Store) in addition to sharpening and embracing the delivery component … I think all these things will dovetail with consumer priorities and experience in other segments, and add up to nothing but upside.