Why 19% Changes Everything for Grocers | Fast Five Shorts

Grocery E Commerce hit a slew of record highs in 2025, including 19% penetration in December, according to Grocery Dive.

Nearly every month in 2025 saw year over year growth in E grocery sales and December was no exception, with sales surging to a record $12.7 billion, which was up 32% year over year.

The final month of 2025 also saw the online share of total grocery spending reach 19%, up 4, 430 basis points year over year as order frequency rates increased.

All of which comes from Brick meets Click's most recent monthly findings.

And those guys I met their, their head the other day, Ann, and those guys are just smoking it with these monthly reports.

Amazon appears to be having an impact too.

Amazon's grocery delivery, as we just alluded to, Amazon's grocery delivery offering, bolstered ship to homes performance.

In December, the segment's average order value grew 14%, exceeding delivery and pickup because of Amazon's same day fresh grocery delivery.

Again, according to Brick meets Click.

Ken, my question to you.

19% E Commerce Grocery penetration has kind of, dare I say it snuck up on us rather quickly in my opinion.

How should regional grocers respond to this news?

I think they definitely have to, they have to be in the game.

They've got to have a good app, a good shopping shopability solution.

They've got to figure out how to do home delivery.

I give all the people that I work with a hard time because they tend to be a lot younger than I am.

I, I can't imagine somebody else picking out my avocado for me because I want to see that it has exactly the right ripeness or the right feel or picking out my bananas.

I don't do green bananas, you know, but you know, I guess other people can get over those critical issues in life and figure out that someone else can pick them out for them.

But I, I, I think the regionals will figure this out.

I think assortment still wins the day for a lot of people because, you know, the better stores have a better assortment, they have a finer quality of product.

And so they'll always be those consumers that want to go to that local, regional, regional location with a better assortment.

But you know, I think it's going to be really critical how all this works out because you probably have seen in the press Kroger's massive failure with Ocado, their distribution centers that they try to put in place, you know, $2.6 billion of impairment taken in those scenarios.

And so it's always a challenge how and Manage fresh delivery in the most time effective way.

But you know, the consumer behaviors are changing and more and more people don't want to get out of their house.

It at a personal level bugs me because we got to get people out of their houses.

But I guess those folks don't really care about leaving their house and they were happy to stay at home and have somebody else do everything for them.

Yeah.

And there's two, there's two points that come to mind for me on this, ken too is 1, is 1, is 20% has always historically been the inflection point where we start to see bankruptcies through the industry.

And, and so you know that also to me the second point brings up the death by a thousand cuts because grocery isn't all just fresh produce either.

Right.

And there's a, and especially as Amazon categorizes it, there's a lot of other items which you know, probably helped the margins to some degree too.

So you know, how do you, how do you think about that in terms of what they need to do to defend themselves against this if some of their basket they traditionally get from the store chip starts to decline?

Yeah.

I mean this is the challenge that Amazon is presenting to so many companies because at the end of the day the possibility of me ordering raspberries online because how many times have you gotten your raspberries on you and they have, they have mold on them.

Well, I'm not going to do it.

But the trick becomes is when all of a sudden I can't use my local grocer just as a raspberry pickup point because he's not going to stay in business that way.

So it's this cannibalization question and the consumers don't appreciate the impact of what this is doing on the cannibalization front because those grocers need more volume to stay in business and they can't just be, to use my overused analogy, the raspberry pickup point.

So that we've got to figure this out.

And it's how they message and how they keep their assortment message out there.

And the key thing is figure out how to offer same day delivery.

There's a lot of cool technology companies out there that are trying to be the anti Amazon and deliver real time delivery or excuse me, very rapid pickup solutions.

And the grocery guys now don't have to develop all that tech.

They can find partners that provide it and that's what they should be doing.

Yep.

Yeah, I'm curious too, John, I want to bring you into this conversation too Because I tend to agree with what you just said there, Ken.

Like it's not going to be an easy battle.

And I love you don't want to be the raspberry pickup spot.

I think I might borrow that and steal that in the future because it's really true.

You don't want to be that.

And so part of me starts to say, you know what, maybe it's time for the regional grocers to get out and harvest, you know, sell themselves, be acquired, start rolling up, you know.

John, what do you think about that approach?

Yeah, I think it's definitely a possibility.

Right.

And some of them are going to go that way.

Inevitably there's not going to be one outcome.

Right.

Some, some to your point are maybe not going to, not going to make it all the way, but others are going to find a way to reinvent themselves and double down on things.

And when I think about what to double down on, if I can expand on that for a second, you know, grocery, let's take a step back.

Right, Right.

Grocery is fundamentally a very local, you know, business.

Right.

I mean, how far will somebody travel to go to a grocery store?

About 10 minutes or so drive time.

Right.

So you have a very fixed radius.

Generally it's a real estate game where you put that, that store in the first place.

So if you take that thought or if you agree to that assumption, then what you can come up, come up with is if you're a regional grocer, you don't have the infrastructure, the dollars to invest in, let's say a big delivery network.

And having, you know, those Kroger or Walmart truck the road, that's just not going to be realistic.

I 100% agree with Ken's point that hey, invest in partners.

Instacart doordash.

Don't try to reinvent your own app.

Don't try to reinvent a delivery network.

You're going to pay a fee.

It is what it is.

But it's table stakes.

If you don't offer curbside pickup, if you don't have an app to download, somebody may just go to the next door within that 10 minute drive radius.

So check the box on those capabilities.

But then the thing you double down on is local.

Be local, local, local, have invest in the highest quality produce at a reasonable price, stock the items that maybe, you know, the different ethnic communities in your area might be interested in that the big box store just doesn't quite pay attention.

Right.

And that's not just in produce.

You can think about the bread you know, bakery section, you can think about that hot buffet area, you know, for ready, ready to eat meals.

Really invest in understanding that 10 minute drive radius who lives there and how do you scratch their itch when it comes to grocery beyond.

Corn flakes are going to be really low price, you know, or you're going to get a Delivery today at 5pm they might wait until tomorrow because you have, you know, a handful of products that mean a lot to that consumer and you know, the big shop.

Right.

Or whoever, not to throw out random names but you know, may not carry.

They might just have a small, you know, aisle with some specialty items.

I think that's where competitive advantage could really come into play.

And the big guys likely just don't have the mind share.

Right.

They're operating at too high of a level so they're going to miss that consumer insight and it's a chance to create an advantage.

Yeah, yeah.

Just seems really hard to do though at the end of the day.

Like I wonder if we're not sitting here looking, you know, 10 years from now looking at the circuit Cities of the world and the Toys R Us.

Is the world getting, you know, getting hit by this?

Yeah.

Ken, you want to add something?

Yeah, I mean it's going to be really, this is always interesting to me because I, you can see it already happening with the impact of Amazon on so many other local stores and chains where they're just really facing a struggle and are the, the consumer doesn't really realize what they're doing.

But unfortunately there, there can be a day in our future where these stores start to close and everybody goes, well, what happened to the stores?

I'm like, well you bought everything from Big Brother and the local store needed to sell some cornflakes to sell the raspberries.

You know, it's, it's, it'll be interesting to see if they're, that inflection point finally starts to resonate with people.

I doubt it will because I don't think consumers think that longer term.

But it is something that concerns me because I just wonder, you know, when, when we lose some of that local delivery capability, what will happen to us?

The other point too is curbside pickup is much more of a factor in these numbers than it was historically when you look at like the Toys R Us and the electronics impact.

So that could be one thing that potentially gives them some benefit.

But, and you get the last word here, what would you advise the regional grocers to do in light of the increasing E commerce grocery penetration statistics?

Look I think it's exactly what all of you have said.

You have to have a culture at a regional grocer that's ready to invest in the technology partners.

They are not technology companies, they are pillars of their community.

And the way that they stand out is by investing in being that place that their community goes to and can trust.

However, the shoppers are being trained to expect same day delivery from, from, you know, Walmart and Amazon and all these, these other grocery providers, the big box stores.

And so I think you have to be invested in how can I make my operations run as efficiently as possible and then how do I get some savings, some cost savings there that I can then pass on to, you know, investing in more, you know, in, in these delivery platforms or lowering prices for my loyalty members or things like that.

I think it's really creating a cultural shift within these regionals of how they're going to approach the business to withstand the next 10 years and some of these competitors.

But I do think there's still a place for regional grocers and I think we heard that loud and clear at FMI a couple of weeks ago from Lateran at Lowe's Foods, from Melissa Vecchio at Fresh Market, from the Schnooks team.

Like everybody there, they, they are still, there's still a place for that, there's still a reason to go to those stores because they invest in their community.

So I think that's going to be a key component to their success is investing in technology in the future and then still being that pillar, that destination, that trusted resource in the community that that's focused on serving their, their customers with the best price possible and the best quality, quality produce possible and, and food.

I was just going to say one thing.

One of those regional stores that you were just talking about, they opened a beer garden in their store and I was like, who in the world's gonna go drink beer at the grocery store?

And I could not have been more wrong.

There are like, Thursday night, the grocery store has become the social hub.

People go hang out and then they go buy groceries drinking beer.

And I just, you know, that's out of the box thinking that made people want to go to the store and that's how some of these regional guys will pull this off.

It's not, it's not all about the cheapest price.

It's about an experience a little bit.

So that's one way you can reach those folks.

Yeah, and I don't necessarily think it's about tech either.

I think what I would say is instead of investing in tech and assuming the tech is table stakes, I'd be investing in what brings you differentiation in the marketplace.

That's how I'd be thinking about it, because tech can.

There's been a lot of tech investments that haven't paid off.

And Trader Joe's is a great example of somebody that is not a very tech forward retailer.

And that store is always packed because they know how to differentiate themselves.