On any given day in Chicago, a network of large, green Peapod delivery trucks buzz about the city’s streets, delivering groceries to homes and businesses. The trucks have become ubiquitous of late, especially on the heels of a particularly brutal winter that prompted many residents to embrace the convenience of home-grocery delivery.
Peapod and its rivals have caused an upheaval in how consumers shop for food, influencing mega-retailers, including Amazon and Wal-Mart, to enter the market with the intent of capturing a growing segment of digital-centric shoppers. They have also created a conundrum for traditional grocery chains unable to offer these services.
“The percentage of spending grocery shoppers will do online over the next 10 years will increase dramatically,” says Bill Bishop, chairman of Brick Meets Click, a Barrington, Ill.-based firm that consults on the use of technology in shopping and retail business models. “The most conservative market-level estimates are 3 percent to 7 percent, and the most aggressive are upwards of 16 or 17 percent,” he says.
Since online giant Amazon launched its AmazonFresh home grocery delivery service in Seattle in 2007, the company has expanded to Los Angeles and announced ambitions to take its grocery delivery model to as many as 40 U.S. markets. Meanwhile, brick-and-mortar grocery stores, in their own efforts to defend market share, have been looking for ways to offer similar 24/7 digital access for their customers, along with the pickup or delivery options that AmazonFresh, Peapod and others are promising.