So, a new survey finds that digital grocery shopping exploded during the pandemic and that it's likely here to stay. Should that be a concern for brick-and-mortar retailers, and by extension, to those who invest in those businesses either directly or through retail real estate investment trusts (REITs)?
Maybe, but my hunch is not necessarily, especially if you're not particularly hitched to whose name is on the store.
Instacart and other shop-and-deliver services are just part of the pressures on brick-and-mortar retail, and they occupy a new and growing niche: a hybrid of in-person shopping and the kind of pure e-commerce in which a retail outlet is cut out completely.
Instacart provides 'A Year of Essential Insights'
First, let's look at the survey, which documented a surge in Instacart-type shopping and found that 77% of respondents who have used services like Instacart during the pandemic plan to again in the future.
Not surprisingly, the survey was commissioned by Instacart and is part of a really interesting blog post titled "Beyond the Cart: A Year of Essential Insights."
The survey was legit, conducted by The Harris Poll, and, along with demographic adoption breakouts, it tracks the range of emotions and acceptance respondents experienced as the pandemic went on and they grew accustomed to this kind of homebound shopping. For example, it noted growing levels of consumer "gratitude" by tracking how often words like "thanks" appeared in chats between customers and their personal shoppers.
As the writer points out, grocery shopping as we know it is a 100-year-old habit, one that I'm not sure will be as easy to break as this blog post seems to imply.
I know the primary shopper in our house prefers to personally examine the produce, and that alone eventually led us to don masks and enter our neighborhood Kroger (NYSE: KR) and Publix stores while avoiding being inside just about anywhere else but our own home.
I'm sure we're not alone.
Instacart shopping is brick-and-mortar shopping
Now, we did use Instacart frequently and had a good experience. (Pro tip: Tip like you're at a restaurant. Not only is it the right thing to do, but the service seems to be even more spot on when you do.)
And the blog does lay out emerging trends that make good arguments for the continued strength of digital grocery delivery, including convenience and safety for seniors and ability for, say, Mom to do Junior's grocery shopping while he's living in a college apartment four states away.
It's also an interesting read about the different adoption rates of different kinds of products, including family planning stuff and alcoholic beverages.
But will this kind of shopping threaten brick-and-mortar?
Probably not. After all, this kind of shopping happens at brick-and-mortar. That's why Amazon (NASDAQ: AMZN) is getting involved. Our Maurie Backman wrote about that just this week: "What Does Amazon's Stealth Grocery Expansion Mean for Real Estate Investors?"
It's complicated and getting more so
Then there's this from the Instacart piece: "With retail partners like Best Buy (NYSE: BBY), Dick's Sporting Goods (NYSE: DKS), the Disney Store, and Sephora all joining Instacart in 2020, we expect to see continued growing interest in same-day, non-grocery delivery, whether for gifts or simply for added convenience."
So, it's not just groceries anymore. Instacart is competing here against these companies themselves for those who buy direct in the store or from company websites -- and, of course, Amazon.
The Millionacres bottom line
Lettuce be clear: The bottom line is that these products are necessities in everyday life and people are going to get them from somewhere. Plus, people like to shop in person for a lot of reasons. It's the same reason restaurants are seeing upturns in business now that it's getting safer to eat out again, too.
For real estate investors, that reality means picking carefully among players all along that food chain, whether it's a warehouse and logistics REIT; a retail REIT; Amazon, Kroger, or Walmart (NYSE: WMT) themselves; or direct investment in a local property that can be a profitable part of this process.