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The Journal Gazette

  • Chad Ryan | The Journal Gazette Kroger employee Natasha Lamica scans in frozen food items as she picks a ClickList grocery order at the Kroger Marketplace store on Dupont Road.

  • Feinberg

Saturday, March 18, 2017 10:02 pm

Grocers' programs selling convenience

Sherry Slater | The Journal Gazette

Local shoppers are gobbling up options for getting groceries without touching a shopping cart.

Less than one year after Kroger began allowing customers to place orders online and pick up items curbside, the national chain’s Dupont Road Marketplace store employs about five times the program’s typical number at similar stores in other cities.

That’s 47 workers in the north-side store dedicated just to the ClickList program, according to spokesman Eric Halvorson.

Meanwhile, competitor Meijer on March 9 announced plans to offer home delivery for customers living in the Fort Wayne area – one of the first three markets where the program will launch.

Retailers are embracing online orders to keep up with competitors’ offerings despite the fact that strategy will cut into profit margins, a Purdue University professor said.

Online grocery ordering is growing, according to German research firm Statista. Data show shoppers spent $7 billion on the retail category in 2015. Experts forecast that amount will more than double to $18 billion in 2020.

‘Convenience factor’

Consumers who use such services fall into various demographics, including millennial moms, busy professionals, senior citizens and people with physical limitations, said Chris Gomez, Kroger’s regional manager.

"I think it’s the convenience factor," he said. "It’s just been fascinating to watch" the growth.

Rick Keyes, Meijer’s CEO, said the customer base also was mixed during a trial period in southeast Michigan.

"We just saw a tremendous response," he said. "We found as we did the test that you can’t pigeonhole the customer based on the program. It’s about convenience."

Susan Fisher turned to Kroger’s ClickList recently when her four grandchildren were scheduled to come for dinner on a workday. After her shift, Fisher stopped by the Dupont Road Kroger and was soon on her way home with fixings for make-your-own sub sandwiches.

"I use it as a time savings so I don’t have to spend an hour in the store," Fisher said, adding that it’s not the first time she has used the service that changes $4.95 per order – starting with the fourth use. The first three are free.

"I don’t think that’s an issue with it," Fisher said of the cost. "I think it’s a $5 well-spent. It’s (the equivalent cost of) my Starbucks (drink) for the day."

From local shelves

Meijer’s new home delivery program requires membership in Shipt, a delivery service. Shipt’s annual fee of $99 allows customers to receive unlimited free delivery of orders costing $35 or more.

For those who aren’t ready to jump into a full-year commitment, they can try the service for $14.99 a month.

Keyes compared Shipt’s service to Uber, which connects people who want rides with drivers who ferry people in their own cars instead of taxis.

Shipt drivers will deliver groceries 24 hours a day, seven days a week to customers within a 30-minute drive from a local store. Keyes described the food delivered as the freshest possible, taken off local shelves rather than from a warehouse or other remote location.

Carol Queen has used Kroger’s ClickList weekly for six weeks and never questioned the price.

Also, picking up on Tuesdays, she has been able to take advantage of the 10 percent discount for seniors. Queen and her husband are in their 70s, and he is recovering from knee replacement surgery.

After hearing about Meijer’s home delivery program, Queen did the math and determined that weekly deliveries would cost about half as much as Kroger’s curbside pickup.

"It’s kind of crazy not to" try it, she said.

Both retailers allow customers to decline substitutions and specify pref­er­ences, such as asking for bananas that are a little green.

Fisher appreciates that she can request – and receive – three chicken breasts or four bananas, for example.

"I don’t feel like I’m getting more than I need," she added.

Fisher’s 87-year-old father is looking forward to the opening of the new Kroger Marketplace store on St. Joe Center Road.

Queen will also transfer her pickup orders to that store, which is closer to her home.

When the expanded store holds its grand opening next month, officials plan to have about 20 workers assigned to fill ClickList orders. The typical store has seven to 10, Halvorson said.

Kroger’s Coventry store devotes 33 workers to ClickList, more than three times as many as the average Kroger Marketplace location.

Keyes expects Meijer will hire 100 to 200 additional full-time and part-time workers per market to pull items for home delivery customers. Fort Wayne is one market.

Following a list

Richard Feinberg, a professor in Purdue’s Department of Consumer Sciences and Retailing in West Lafayette, questions whether online ordering will be a winning strategy for stores.

But he expects the offerings will be increasingly popular.

The growth could cut into in-person purchases, however.

And that’s not good.

Typical grocery stores’ average profits are a wafer-thin 1 percent to 2 percent, Feinberg said. And that’s after using various strategies to goose sales, including featuring some products in displays at the end of aisles and stocking others at eye level.

Also, checkout lanes are stocked with high-profit-margin goods, including candy and magazines, with the hopes that customers give in to temptation and grab the items.

But when consumers shop online, those tricks don’t work, and shoppers’ orders are limited to what’s on their list rather than what catches their eye.

Queen has noticed the difference in her weekly grocery bills.

Kroger’s ClickList program "saves money because you don’t come out with a double cart" full of groceries, she said.

Feinberg speculated the $4.95 fee that Kroger shoppers pay to use ClickList is probably used to cover the additional payroll costs for hiring the program’s workers.

It wouldn’t, he said, be enough to pad the retailer’s profit margin.

"I don’t think anything makes up for the lost impulse items," he said during a phone interview.

Even so, Feinberg believes retailers almost have to offer online ordering to maintain relationships with customers.

The hope is that shoppers continue to visit stores regularly, too. Feinberg is among those who look forward to such outings.

"We treat grocery shopping as dating, my wife and I," he said.

"There’s always a new Oreo cookie flavor I didn’t know about.

"In my otherwise boring life, that’s a big deal."