Thanksgiving is the busiest time of the year for grocery retailers, but not all of the action is happening in stores. Increasingly, shoppers are going online to buy their turkeys, pies, sweet potatoes and other fixings.
Research shows that online sales growth is far outpacing in-store sales growth around the food-focused holiday. According to data collected by e-commerce firm Unata, online grocery’s sales lift in the two weeks leading up to Thanksgiving was nineteen times higher than in-store last year. Across the retail industry, online sales this holiday season are expected to jump 16.6%, according to eMarketer, while overall retail sales should increase by a modest 3.1%.
While it’s expected that sales growth in the small but rapidly expanding online grocery business will outpace store sales growth at any given time, the lift rate is particularly striking around Thanksgiving, Unata CEO Chris Bryson told Food Dive.
Not only are existing online shoppers building bigger baskets, he noted, but new shoppers are trying out different services. According to Unata, the number of unique users buying groceries online increased 20.3% during the Thanksgiving period.
“[Grocers] know there’s a lot of traffic and that if they can get the user into the service this week, they can probably retain those shoppers,” Bryson said.
Stocking up with a few clicks
Julie Coop, outreach and events team lead with Shipt, which provides e-commerce services for Meijer, Costco and numerous other retailers, told Food Dive the company has seen consumer demand surge around Thanksgiving. Shipt recorded a 25% sales jump last year around the holiday compared to average sales the rest of the year, and is anticipating at least the same increase this year, Coop said.
To capitalize on the spike in demand, Shipt offers special deals on Thanksgiving essentials, funded through its partnerships with CPG companies. The company also works with retailers to make it as easy as possible for shoppers to find products on its site and mobile app.
The ability to locate Thanksgiving staples in a matter of seconds rather needing to walk up and down store aisles, Coop pointed out, is one of the main advantages e-commerce has over in-store shopping.
“We know at Thanksgiving that people are looking for sweet potatoes, and they’re looking for cream of mushroom soup and turkey and so many other things,” she told Food Dive. “We’ve made those things easy to find on the app.”
There are plenty of other ways grocers are promoting Thanksgiving sales online, too. Special Thanksgiving tabs on websites are a popular feature, like Roche Brothers’ “Thanksgiving Essentials” menu that offers everything from onions to packages of cubed squash and boxes of Ritz crackers. Other grocers are offering special deals and convenience-focused offerings, like meal kit sides, bundled meals and heat-and-eat dinners. Oliver’s Market in Sonoma County, California, doesn’t offer online ordering throughout the year, but makes an exception at Thanksgiving time, when customers can reserve a heat-and-eat Thanksgiving dinner online and pick it up at their local store.
To entice customers to try online shopping, some grocers are lowering the price of membership and delivery. Lowes Foods, for one, lowered the price of its annual membership from $99 to $39 this week, according to Bryson, who works closely with the East Coast chain. The membership includes free shipping on orders over $35.
Peapod, the Ahold Delhaize-owned online grocer that operates in 13 states, introduced a Thanksgiving landing page, shoppable recipes and various entertaining tips to its site in the weeks leading up to the holiday. Carrie Bienkowski, Peapod’s chief marketing officer, said the company made its full holiday dinners available four days earlier than in past years, and emailed customers to let them know when its Nature’s Promise turkeys would be available.
To encourage customers to build bigger baskets, Peapod will offer $20 off any order of $225 or larger.
“Understanding that Peapod shoppers are planners and that preparations often start weeks ahead of time, we worked to get Thanksgiving offerings on the website earlier than in previous years,” Bienkowski told Food Dive in an email.
“We know at Thanksgiving that people are looking for sweet potatoes, and they’re looking for cream of mushroom soup and turkey and so many other things. We’ve made those things easy to find on the app.”
Outreach and events team lead, Shipt
Three years ago, Peapod began partnering with CPG manufacturers to develop side dish meal kits. This year, the company joined with Campbell’s to develop new holiday recipes, including cheesy bacon corn pudding and onion, pancetta and rosemary stuffing.
Peapod hopes its Thanksgiving promotions can help turn around lagging sales on the year. During Ahold Delhaize’s most recent earnings report, company executives singled out the online grocer for its single-digit sales growth, and said they would do more to integrate Peapod's merchandising with its physical store network.
Thanksgiving week is prime time for sales
As Thanksgiving Day approaches, grocers are seeing online sales intensify. Last year Instacart, the e-commerce company that handles online ordering and fulfillment for more than 130 supermarket chains, recorded a 60% spike in orders of traditional Thanksgiving ingredients the week of the holiday compared the week prior. This included meat thermometers, chopped pecans, Cornish game hens and lime Jell-O. According to a company spokeswoman, the number one most searched item during Thanksgiving week was “onion.”
Like Peapod, Instacart has forged partnerships with CPG companies. The grocery delivery service offers special promotions through more than 600 brands throughout the year, and during the Thanksgiving season secures special product discounts, free delivery and other perks through these companies.
“We are partnering with brands like Kraft, General Mills and Coca-Cola to offer discounts and free delivery when customers order select Thanksgiving items,” an Instacart spokeswoman told Food Dive in an email.
A strong economy, low unemployment and production costs are all working in shoppers’ favor this holiday season. According to the Farm Bureau, the price of a Thanksgiving meal will average $49.12 this year — $0.75 less than last year, and the lowest total in five years.
But grocers face challenges that could keep this Thanksgiving from being the homerun they’d like it to be. Despite the meteoric rise of e-commerce sales across the retail industry, grocery has remained an outlier due in part to consumers’ desire to pick out fresh items themselves. Estimates put e-commerce market share at around 3%. According to a recent report from consulting firm Brick Meets Click, supermarkets that offer online shopping earn 3.4% of their sales through this channel, 5.2% among those grocers that have offered the service four or more years.
“That kind of industry pressure is going to force a lot of grocers to not only take their Thanksgiving activities mores seriously, but also digital in general."
Another challenge that comes with Thanksgiving sales migrating online is that it opens up competition to other channels. Home goods retailer Williams Sonoma, for one, offers a full Thanksgiving dinner for $300, while online specialty store Harry & David lists a “Gourmet Turkey Feast” for $200, and full turkeys and spiral-sliced ham for under $90.
And then there’s Amazon, which last week rolled out another round of price cuts at its Whole Foods stores, including many on holiday staples like canned pumpkin, sweet potatoes and eggs. Headlining the cuts were fresh organic turkeys selling for $3.49 per pound and antibiotic-free turkeys for $2.49 per pound. Amazon Prime members got an additional discount, bringing the turkeys down to $2.99 and $1.99 per pound, respectively.
With Amazon set to introduce more Prime discounts, sell more gadgets in stores and eventually offer an updated e-commerce platform, the threat to grocers this Thanksgiving and beyond is very real, according to sources.
“That kind of industry pressure is going to force a lot of grocers to not only take their Thanksgiving activities more seriously, but also digital in general,” said Bryson.