Online grocery shopping is revolutionizing supermarkets

The retailer wants delivery drivers to bring groceries right into your fridge–even when you’re not home.

Time

(Photo: Mike De Sisti / Milwaukee Journal Sentinel)

Because of people like Sarah Fracek, the supermarket industry is undergoing its own digital revolution.

It’s all because Fracek has become one of a growing number of consumers who conduct almost all of their grocery shopping online.

“I hate going into a grocery store,” said Fracek, 34, a Wauwatosa, Wis., resident who doesn’t mind spending a few extra dollars to have someone else assemble her grocery order and either deliver it or have it ready for her to pick up.

“I’m working super late, and I really value the time that I have that’s ‘me’ time,” she said.

A tech-savvy, time-starved population, led by folks like Fracek in the 18 to 35 age group, has catapulted digital grocery shopping into the fastest-growing segment in U.S. retail.

Costco rolls out two grocery delivery services to fight growing competition from Amazon and Wal-Mart. Fred Katayama reports. Video provided by Reuters Newslook

“This is no longer something to just keep an eye on,” says the Food Marketing Institute, a retail food trade group based in Arlington, Va. “It’s happening, and it’s habituating very large numbers of people very quickly to online-only providers and to the online channel for groceries.”

The organization has been surveying trends in the industry for 40 years. Its latest survey, released this month, describes growth the likes of which it doesn’t ever expect to see again: In 2017, 43% of millennials surveyed said they shop online for groceries at least occasionally — a 50% jump from 2016, with much of the growth coming among those who say they shop for groceries online “either fairly often or all the time.”

The phenomenon has attracted the likes of Costco, Walmart and Target. And it is not necessarily bad for conventional grocery stores, which are moving quickly and aggressively into the digital marketplace.

Milwaukee-based Sendik’s Food Markets introduced online grocery service in the fall of 2015.

“Research will tell you it is the fastest-growing form of all retail by leaps and bounds, far surpassing electronics and all other components of the online space,” said Mark Birmingham, vice president of administration and development for the company.

“The rate of adoption over the last 12 to 18 months — I think it’s growing faster than anybody expected,” Birmingham said. “It is the fastest-growing part of our business."

Grand Rapids, Mich.-based Meijer, which expanded into the Milwaukee area in 2015, says its online food business has grown rapidly.

The company said Wednesday it is on pace to see more than a million deliveries made from its stores by year-end.

Online customers typically pay a fee for the gathering and/or delivery of their groceries. The prices and structures of the services vary among retailers. An example: At Woodman’s, the fee for gathering and delivering an order is $9.95. If you decide you want to pick up your order and it’s under $100, the fee is $4.95. If you want to pick up your online order and it’s over $100, there is no fee, according to the company’s website.

“People want to do it, and they are willing to pay a little bit more for the service,” said Clint Woodman, president of Janesville-based Woodman’s. “We’re seeing good growth. We are looking at expanding our delivery area.”

The Milwaukee-based Roundy’s division of Kroger, the big Cincinnati-based supermarket chain, is continuing to roll out its ClickList e-commerce program at stores in Wisconsin, said spokesman James Hyland.

“Today’s customers want an in-store option and a digital option for their grocery shopping needs,” Hyland said.

Online service also can help smaller grocery operators grow.

“We look at it as a way of expanding our trade area without having to build more stores,” said Darlene Murphy, director of marketing for Metcalfe’s Market, which has has stores in Wisconsin.

Food producers also are watching the situation closely.

Hamdi Ulukaya, CEO and founder of Chobani yogurt, sees it as a kind of throwback, especially for products like his company’s.

“I see the milkman coming back, I really do, for fresh food,” Ulukaya said. “You wake up and go to the door and there’s your milk and cheese. It’s coming back to what it was in the early days.”

Digital grocery shopping essentially has been a phenomenon waiting to happen, with the industry finally catching up to the demands of younger consumers, said Jim Hertel, senior vice president of Willard Bishop, a Chicago-area food retail and production consultancy that is part of Inmar Analytics.

“Millennials are just online all the time,” Hertel said. “Now that they are forming households, it’s less about their adopting online and it’s more that they are shopping for food and doing it the way they would normally do anything, which is online.”

Fracek started using the online grocery service Peapod six years ago and places an order nearly every Sunday.

“If someone can pick out the things that I want, it’s a waste of time for me to go,” she said. “I would rather be doing something I enjoy.

“I still run into the store, but usually it’s when I haven’t planned ahead. I’ll run in to get stuff for one meal — odds and ends.”

Buying groceries online has proven to be a blessing “for someone working crazy hours and doesn’t want to go to the grocery store when you’re getting done with work at 8 p.m.,” Fracek said.

Quality still matters

For grocers, online or in person, the quality has to be the same, FMI’s survey says.

“Shoppers most often cite high-quality fruits and vegetables and high-quality meat among the attributes considered important when selecting a primary store,” the survey says. “Low prices come in right after that.”

Consumers also want to know where their food comes from and how it was produced.

“Millennial shoppers especially want to support companies that share their values and prioritize a broader good,” according to the FMI survey.

While younger adults are driving the change, the online food business transcends generations, said Birmingham, the Sendik’s executive. Seniors and those who can’t navigate store aisles so well anymore are adopting online grocery shopping.

Added Hertel, the grocery consultant: “The smart supermarket operators are recognizing that as consumers change, they are going to engage with food not any less but very differently in terms of how they order it, what they are looking to consume and how far along on the preparation continuum they are willing to go.

“I do think it’s going to be really hard to recognize the traditional supermarket five years from now,” he said.

James B. Nelson of the Journal Sentinel staff contributed to this report.

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Smart Shopping Tips That Will Save You Money

No matter what you are shopping for, you can most likely save money simply by implementing a few tips and tricks. Check out some of these money-saving suggestions to cut back on your expenses the next time you buy something online or at the store:

1. Make sure you really need the item. Before you make a purchase, stop to ask yourself whether or not you really need the item that you are buying. For instance, if you are getting ready to buy a new power tool for a project, think about whether you could save money by renting it or borrowing it from someone else instead. If you see something at the grocery store that catches your eye, ask yourself if it is a necessity or if it is an impulse buy. Scrutinizing your choices can help you avoid making unnecessary purchases.

2. Shop around and compare prices. Prices can vary quite a bit from one store to the next. The Internet has made it easier than ever to compare prices. Check a few different stores before deciding where to buy an item. Don’t forget to factor in the cost of shipping if you are planning on ordering online.

3. Take advantage of coupons. Most retailers offer coupons in one form or another. You can either cut out or print paper coupons to take with you to the store or you can use online promo codes or coupon codes during the checkout process. Either way, before you make any type of purchase, do a quick search to see if there is a coupon available that can save you money.

These simple shopping tips can help you significantly cut back on your expenses. Not only are they easy to implement but they can also have a positive impact on your finances.

Connecticut tax-free shopping week begins Sunday

HARTFORD, Conn. (AP) — Connecticut’s sales-tax-free week kicks off this weekend as parents and students get ready for the new school year.

The 17th annual tax holiday begins Sunday and runs through Saturday. Most clothing and footwear priced under $100 will be exempt from Connecticut’s sales tax of 6.35 percent.

Officials say the state will lose an estimated $4 million in tax revenue during the week.

State Revenue Services Commissioner Kevin Sullivan says the tax holiday offers an important break for families, and many stores also will be offering back-to-school discounts.

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Shopping for Floor Lamps

Floor lamps are often supporting players in a room, rather than the stars of a space. But even if they go unnoticed, they are essential to creating the right atmosphere.

“They offer nice ambient light that you cannot achieve just with overhead lighting,” said Victoria Hagan, an interior designer in New York. “I use them on every single project.”

When designing homes for her clients — many of which will be included in her book “Victoria Hagan: Dream Spaces,” published this fall by Rizzoli — she uses floor lamps in a variety of ways.

“Some are lower, which is great for reading,” with shades that direct light down to an armchair, she said. “Then there are taller floor lamps that I use in a sculptural way.” Still others have long arms that cantilever over sofas to illuminate whole seating areas.

“There are so many different kinds,” Ms. Hagan said. “You just have to know which move you want to make.”

• How much of the floor will the lamp occupy? “Some have a huge base and are very clunky, which defeats the whole purpose,” Ms. Hagan said. “I like it when they don’t take up a lot of space.”

• Does the lamp have the right light intensity and temperature? “If you’re in the market for a reading lamp,” Ms. Hagan said, “you need to go see it in person.”

• How does it work with the other light fixtures in the room? “I always like to mix different layers of lighting,” she said, with multiple fixtures that can be used together.

Japanese-inspired lamp with terrazzo-like base by Ross Cassidy | $299 at CB2: 800-606-6252 or cb2.com

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Metal lamp with brass-capped feet | $198 at Anthropologie: 800-309-2500 or anthropologie.com

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Lamp with brass finish and two milk glass shades by Bower | $399 at West Elm: 888-922-4119 or westelm.com

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Lamp with polycarbonate shade by GamFratesi | $835 at FontanaArte: 212-334-3295 or fontanaarte.com

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Height-adjustable LED lamp with aluminum head by Daniel Rybakken | $1,410 at Luceplan: 212-334-1809 or luceplan.com

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The Top Benefits Of Online Shopping

The following are some of the major reasons why people choose online shopping. The majority of people browse popular online e-commerce sites after searching for particular keywords through a search engine. Although there are some disadvantages to shopping online, the benefits far outweigh the disadvantages.

Are you online shopper? Are any of the following benefits the reasons why you prefer this option?

Better Prices

The majority of online stores offer products and services at prices that are not as expensive than their brick and mortar counterparts. There are a few reasons for this. One reason is that shop owners understand that online shoppers are looking for a bargain. As a result, these shop owners are more willing to slightly lower their profit margins so they can attract more customers to their stores.

More Variety

Physical stores have limited storage for items. This means that they can only have a limited supply of items on hand at one time. There may even be policies in place regarding the availability of certain products. For example, some stores may only offer a certain product for store that are located in malls.

On the other hand, online shopping gives shoppers access to items that they may not be able to find in the physical store. You also have the option to order products that would not normally go together like quilts and golf tees.

Convenience

This is a very convenient way to shop for the items you want and need. You do not have to get dressed to get products from your favorite store. You can order anything you need from the comfort of your home. This means that you do not have to wait until the store open or fear the store will be closed before you get off work.

Online shopping offer these benefits and more. As technology becomes more advanced, so will shopping options for shoppers.

How to save time and money food shopping

With a greater of selection of food markets, specialty stores and bulk discounters comes greater efficiency and cost savings for shoppers.

However, sometimes the reverse is true.

"It’s a very competitive environment for groceries, which is great news for shoppers," said Tobie Stanger, a senior editor at Consumer Reports. "That competition drives down prices."

But on the flip side, now it’s not unusual to do your shopping at not only the grocery store but the farmers’ market, warehouse club and big-box retailer, too — all in a typical week. Each month, 68 percent of Americans shop at least five different types of food retailers, according to the Hartman Group, a consulting firm for the food industry.

That has also taken a toll on the one-size-fits all supermarket. "Remember A&P? It was around for more than 150 years, but closed in 2015," Stanger said.

Now the stores that fare the best are so-called premium stores such as Wegmans, specialty stores like Trader Joe’s and discounters such as Idaho-based WinCo, the ratings magazine said.

In fact, Wegmans has held the top spot among all food retailers since 2006, according to a Consumer Reports subscriber poll, thanks to its competitive prices, prepared foods, healthy options and customer service.

But making one to Wegmans run for ready-to-cook meals, another to Trader Joe’s for Two Buck Chuck and a third stop at Costco for paper towels, along with all of the impulse items along the way, can strain any household budget, not to mention the time wasted food shopping.

To curb the added costs of this new way of buying food with multiple stops, Stanger recommends sticking strictly to a list, enrolling in store loyalty programs to get the best prices and shopping at quieter times, such as a Monday or Tuesday night, so you can move faster through the stores.

Added bonus: Some items are cheaper mid-week, when stores want to clear their inventories. For example, beer is 9 percent cheaper on Monday than it is on Saturday, according to discount app Ibotta. A win-win.

"On the Money" airs on CNBC Saturdays at 5:30 a.m. ET, or check listings for air times in local markets.

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Mall offers ‘Man Pods’ for men who hate shopping

A mall is offering "Man Pods" to despairing husbands and boyfriends that don’t like shopping. Buzz60’s Maria Mercedes Galuppo (@mariamgaluppo) has more.

The failure rate for businesses has dropped by more than 30% since 1977, according to a report from Case Western. That’s good news, but more than 50% of all new businesses still fail within their first year and by 10 years, more than 96% will have failed.

The fact remains: Starting a company is hard. Really hard. Most people with an idea do nothing more than talk about it, and even entrepreneurs who pursue their passion usually fail.

Day jobs are easy. If you have one, you may want to think twice before leaving to start your own business. But if you do leave, make sure you have more than enough money to finance your family and your business. The general rule of homebuilding also applies to company building: make a budget, double it, then double it again—that is roughly half the amount you need.

The vast majority of business owners started their companies because they loved their industry and believed they could provide a great product or service. Passion is important and sexy, but boring financing is equally important. Businesses need working capital to grow and to cover cash flow fluctuations. The problem is that most entrepreneurs I know hate raising money. It can be frustrating and the consequences of making a wrong choice are severe.

It doesn’t have to be this way. Here are a few things I’ve learned as an entrepreneur and investor that can help you find the right financial partner to get the capital you need:

Your best financial partner is staring at you every time you brush your teeth in the morning. I have received lots of pushback on this, but I still firmly believe that you shouldn’t take a penny of someone else’s money until you have put every penny you can afford into your business. Building a new company should be about putting in absolutely everything. And by that, I mean not just blood, sweat, and tears. I mean your own money, to the point that you are (moderately) uncomfortable. Personal loans, personal credit cards, and home equity loans also fall into this category, and sometimes these come with surprisingly low interest which makes them smart financial decisions regardless of whether you can get a traditional business loan. Some would say to never leverage yourself in this way, but smart entrepreneurs have found great rates and terms that make good economic sense. But beware: introductory rates, for example, are great, so long as you refinance them before the rate expires.

The latest Private Capital Access report, a joint project between Pepperdine University and Dun & Bradstreet, showed that the most successful type of financing comes from friends and family. Some say that borrowing from friends and family is unwise, but again, I disagree. I always tell entrepreneurs that after putting in everything you have, you should go to your mom and dad, then your grandmother, then your friends. If your kids have a piggy bank, consider an investment in their future. Then take a deep breath and feel that weight on your shoulders. For me, there is nothing more frightening than losing my mom’s money. If her money is in my business, everyone else’s will be much safer.

The Private Capital report showed that the most common source of business credit is still a traditional bank. Banks are a common source of capital but a really difficult one: The overall success rate to get a bank loan was only 39% in the first quarter of 2017. This means that the majority of companies that seek a bank loan do not receive them. If your company has the type of history and balance sheet that is attractive to banks, by all means take advantage. But not all business loans are the same so make sure you don’t have a personal guarantee or your “business loan” will be nothing more than a personal loan in disguise.

There are great alternatives to bank financing, some of which may surprise you. Community Development Financial Institutions (CDFIs) and other community lenders have many attractive options, especially for women and minorities. Online lenders can provide a fast, convenient option for early loans, although there may be a steep price for that convenience so choose carefully. Crowdfunding is another alternative source. Appealing directly to potential customers for financing has made several upstarts wildly successful, and tens of thousands more have reached more moderate goals. Yet 61% of business owners surveyed in the Private Capital report say they don’t understand how alternative financing works. If you have a company that needs capital, make it your business to learn more.

Many entrepreneurs think that attaining venture capital is the ultimate goal of a startup. It can be a great source of capital for some, especially highflying technology companies. But be warned and wary: venture is hard to come by and is expensive. Raising venture capital also requires an eventual sale. If you try the venture route, plan for at least a nine-month process and seek introductions to as many VCs as possible. The most important thing to remember is that you’re looking for a partner, not just a loan. Venture capital is expensive capital, but what makes it worthwhile is to partner with other brilliant minds who can help you avoid entrepreneurial pitfalls.

Jeff Stibel is the Vice Chairman of Dun & Bradstreet and a Partner of Bryant Stibel. He is the USA Today bestselling author of Breakpoint and Wired for Thought. Follow him on Twitter at @stibel.

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