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Online produce orders grow, but still behind supermarket sales

More and more consumers are buying produce through online services, but most purchases are still being made at brick-and-mortar retailers, said speakers Thursday at United Fresh 2014 in Chicago.

“Online produce purchases are still not making a significant dent in the overall marketplace. It’s very attractive, but won’t overwhelm brick-and-mortar soon,” said Randy Burt, principal at A.T. Kearney, a management consulting firm headquartered in Chicago.

Burt was joined by Tony Stallone, VP of merchandizing and food safety at Peapod in a session called Online Produce Sales: A Permanent Trend or a Temporary Fad?

The online purchase of produce, and food in general, may not have yet taken off in the United States, but brick-and-mortar retailers shouldn’t get too complacent, said Stallone. Peapod had double-digit sales growth in 2013, while sales at conventional grocery stores grew by no more than 2%. Produce is the fastest growing online sales category, he said.

“Produce is the gateway to most [online] sales,” said Stallone.

Driving the trend for online produce purchases is the increasing urbanization of society, with more suburbanites moving to large cities, said Burt. The typical customer wants the convenience of online shopping and they are always able to access any information they want, any time they want, through technology. Also among the drivers is the rise in smaller households, such as empty-nest Baby Boomers and Gen X who are putting off marriage, he said.

“They also want a personalized shopping experience, which online can do better than brick-and-mortar although some grocers are figuring that out,” Burt added.

He predicts that the future on produce purchases will be a combination of online and conventional retailers.

“[But] whoever wins the perishable side of this business will win the online shopping business,” added Stallone.

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