Top 4 Grocery Stories of 2018

December 7, 2018

As we hurtle towards 2019 at what sometimes seems like lightning speed, it seems like only yesterday that we were recapping the top grocery stories of 2017. Comparing last year's list to this year's top stories, it's easy to think that not much has changed in grocery. Many of 2018's stories are along a similar vein to 2017. Dig a little deeper though and it becomes obvious that while the overall themes are the same, grocery has evolved greatly within these themes over the past year.

 

1. Online grocery revenue predictions 

 

Last year we (and everyone else) wrote about Nielsen's prediction that one-fifth of all grocery spending (a total of $100 billion) is expected to come from online shoppers by 2025. Grocery tends to lag behind other retail spaces when it comes to e-commerce adoption, so for this statistic to become a reality it would mean a relatively rapid change in attitude from consumers towards online grocery. We were pleasantly surprised this year to learn that the estimated $100 billion spend is now predicted to occur by 2022 or 2024. There are a number of reasons for this. Retailers are continuing to invest heavily in strategies such as click and collect and same day delivery. Kroger partnered with Ocado in 2018 in a deal that would see three automated customer fulfilment centres built using Ocado's well-tested technology. Kroger's CEO described the deal as 'transformative', and we agree. With consumers getting to grips with turning over control of their grocery shopping to grocery retailers, a seamless fulfilment strategy will be vital in order to foster loyalty.

 

2. Shoppable recipes 

 

Another story that was also trending in 2017, shoppable recipes stepped it up a gear in 2018. Myxx announced that it was adding Walmart, Albertsons and Safeway to its shoppable recipes platform, bringing shoppable recipes truly mainstream. Another story that caught our eye this year came from Avocados From Mexico. Illustrating the connection between shoppable recipes and valuable data, Avocados From Mexico announced in October that it would be making the recipes on its site shoppable, and using the associated data to improve the customer experience. This enhanced customer experience will include more personalised recipe suggestions. The interesting thing about this strategy is that it offers customers the right recipe at the right time, while giving Avocados From Mexico even deeper insight into what their customers truly want and enabling them to further personalise their offering.

It would be impossible to talk about shoppable recipes in 2018 without mentioning Whisk, a leader in shoppable content. In February, it was announced that Whisk would be connecting more than 20 recipe publishers with Amazon via shoppable recipe content. Not just that, but their acquisition of Avocando this year expands their shoppable recipe reach across Europe. 

 

3. A mixed year for meal kits

Source: Blue Apron 

 

Back in July, we learned that meal kit company Chef'd had closed down. It wasn't the first time a meal kit service had shut down, but given its partnerships with the likes of Innit and a number of grocery retailers and CPG brands, the news came as a bit of a surprise. Not long after the closure, its assets were acquired by True Food Innovations and it was restructured as an in-store only meal kit company. Chef'd is not alone in embracing the in-store model. It has become clear in 2018 that the subscription model is flawed, particularly when it comes to customer retention. With the likes of Kroger (one of the most innovative grocery retailers) putting their Home Chef in Walgreens stores and Blue Apron trialling a partnership with Costco, there has been a clear trend towards in-store meal kits in 2018. Interestingly, Blue Apron has halted its pilot with Costco for the holidays, with the intention of resuming the trial in 2019. This could indicate further issues for Blue Apron, a company that has struggled with high customer acquisition costs amongst other issues, or it could simply reflect that customers are less likely to pick up a meal kit over the holiday period. Meal kit sales are set to reach $3.1 by the end of 2018 though, so while it has been a mixed year, the meal kit space is by no means dead. 

 

4. Amazon continues to disrupt

 

When Amazon acquired Whole Foods in 2017, it was expected that the e-commerce giant would significantly disrupt the grocery sector. In many ways, it has. Other retailers such as Kroger and Walmart have stepped up their innovation efforts in response to Amazon, while 2018 second quarter grocery sales figures estimated that Amazon was up 40% year over year. The big news from Amazon in 2018 though is undoubtedly its expansion of Amazon Go. Few would have expected Amazon to make an impact on convenience stores, but with Amazon Go expanding rapidly in Seattle, and into Chicago and San Francisco, that's exactly what they're doing. Interestingly, The Spoon just wrote about Amazon Go's latest hiring spree, with jobs listed in the US as well as Israel and Luxembourg. Does this point to plans for an overseas expansion of Amazon Go? One to watch.

 

While 2017 was a transformative year for grocery, 2018 saw the grocery sector maturing, particularly in terms of innovation. Online grocery went mainstream, meal kits tried to find their feet, and recipes took centre stage. We suspect that 2019 will be the year online grocery adoption really explodes and we'll continue to bring you our thoughts on the latest developments right here. In the meantime, pop back next week to reach about the biggest smart kitchen stories of 2018.

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