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In online grocery, Amazon and Walmart at ‘genius’ level

Performance, capabilities vary widely among retailers, study finds

Amazon and Walmart stand above other food retailers as “geniuses” in online grocery, an area that has become the industry’s top growth catalyst, according to Gartner L2’s Grocery U.S. 2019 Digital IQ Index.

The only two grocery retailers achieving the Genius level in this year’s index, Amazon and Walmart earned respective scores of 144 and 140.

Online grocery players making the Gifted tier included Target (score of 139), Kroger (134), H-E-B (127), Sam’s Club (125), Walgreens (124), CVS Pharmacy (119), Whole Foods Market (119), Publix (113), ShopRite (112), Safeway (111), Instacart (110) and Thrive Market (110).

Grocery_retailers_Gartner_L2_2019_Grocery_Digital_IQa.pngSource for both graphics: Gartner L2 Digital IQ Index: Grocery US 2019

“Digital grocery still only makes up a small portion of total sales in the U.S., but it’s the leading driver of growth in an industry with famously narrow margins. However, customers are hesitant to buy their groceries online, and consistent survey data identifies concerns about product freshness and price as the main obstacles,” Gartner L2 said in the Grocery U.S. 2019 Digital IQ Index report.

“Retailers have a long way to go before their digital offerings replace weekly shopping trips, but an increasing share are investing in key tools like pickup windows and freshness guarantees,” the New York-based research firm noted. “Leaders in the space have invested strategically in fulfillment and digital tools to improve the store experience and stem the loss of customers.”

In assigning an index score, Gartner L2 rated grocery retailers on websites and e-commerce, digital marketing, mobile and social media, with the first three areas accounting for 30% of the score and social representing 10%. Depending on their score, companies were classified as Genius (140 or higher), Gifted (110-139), Average (90-109), Challenged (70-89) and Feeble (below 70).

“This year’s Index closely matches that of 2018, with Amazon and Walmart leading in the Genius category due to their exceptional fulfillment capabilities and massive marketing across platforms,” Gartner L2’s study said, adding that the two companies’ scores only include their performance in selling and promoting grocery fulfillment. “Notably, each still has major steps to take to achieve a seamless online grocery experience. Both have an excess of platforms for customers to navigate, with Amazon offering fulfillment across, Amazon Fresh, Prime Now and Pantry, and Walmart splitting Walmart Grocery from its main offering on both its sites and apps.”

Of the 62 online grocery players in the index, 3% were classified as Gifted, 19% as Gifted, 40% as Average, 16% as Challenged and 21% as Feeble. The Gifted category shrank from 2018, when it accounted for 37% of companies, and this year’s index includes for the first time chain drug retailers Walgreens, CVS and Rite Aid because of their growing presence in retail grocery. Both Walgreens and CVS were classified as Gifted.


“This year’s Gifted class stands out for offering customers a superior experience when building lists, placing orders and using mobile tools in stores,” according to the report. “In addition, the Gifted category stands out for exceptional promotion, particularly in text ad visibility across non-branded keywords.”

Among the online grocers in the U.S. Grocery Digital IQ Index’s Average group were Hy-Vee, Costco, Meijer, Giant Eagle, Stop & Shop, Wegmans, Winn-Dixie, Shipt, BJ’s and a number of Kroger Co. chains (Harris Teeter, Ralphs, Fry’s, Fred Meyer and Dillons).

“The Average category remains a robust group, with high adoption of fulfillment tools but generally lagging performance on social media. Notably, three pure plays — FreshDirect, Jet and Peapod — fell into this category from Gifted due to their declines in digital marketing and social media,” Gartner L2 observed. “Overall, Average brands tend to have well-optimized mobile sites offering the core features for in-store grocery like loyalty, couponing and list building.”

Grocers in the Challenged group included Aldi, Lidl, Sprouts, WinCo, Save Mart, Price Chopper, Jewel-Osco, Food 4 Less and Ahold Delhaize USA’s Hannaford and Food Lion chains. Among the retailers classified as Feeble were Trader Joe’s, Smart & Final, Cub Foods, Stater Bros., Market Basket, Dean & DeLuca, Schnucks, Ingles, Save-A-Lot, Price Rite, Family Dollar and Albertsons Cos.’ Acme Markets and Shaw’s chains.

“Challenged and Feeble brands offer few branded fulfillment capabilities, and more than one-third do not partner with Instacart or Shipt to offer delivery,” Gartner L2 explained. “While having an app is not required for a brand’s score, Challenged and Feeble brands that do have apps offer few features and tend to earn low ratings from customers, making the apps net losses for the brands.”

Brand-owned online grocery delivery and pickup saw only slight gains in 2019 among the grocery retailers in the index. Fifty-nine percent offer delivery via a branded site, 42% offer free delivery and 37% provide a delivery time window. Meanwhile, 53% enable pickup through a branded site, 39% offer free pickup and 46% provide a pickup window.

“The race to capture and keep digitally savvy customers pushed grocery retailers to build out site features that ease shoppers into the e-commerce experience. However, the majority of retailers fail to address core customer concerns,” the report pointed out. “Index leaders focus on every touchpoint to make online grocery shopping easy. They assuage concerns about produce quality and make it easy to find products and plan orders — essentially addressing the main reasons why shoppers stay away from online grocery.”

Gartner L2 said grocery retailers also are falling short in capitalizing on digital shopping features that could boost transaction sizes. For example, 71% of the index brands offer online shopping lists. Fifty-eight percent also enabled products to be added to the list from search results, and 40% allowed products to be added to the list from recipe pages. However, only 10% cross-sold items through shopping lists, and just 6% enabled  customers to add cross-sold items from the online cart.

“Grocery retailers should pay more attention to touchpoints further down the purchase funnel to provide value available only through digital platforms and make it easier to build a large basket of goods,” according to the study.

More can be done by supermarkets in the area of online search as well, Gartner L2 said in the report. “Traditional grocery retailers are nearly invisible in Google search results for keywords like ‘snack bar’ and ‘Tide detergent,’ and they should invest in CPG terms to compete with multicategory leaders. Paid search is especially important due to its ability to drive retailers to the top of the page, but many grocers are entirely underinvested in these platforms.”

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