Sales of essential goods like grocery are getting a boost from e-commerce for more than a year now. In fact, e-commerce has been breathing life into the retail sector that is still reeling under the blow it received from the coronavirus outbreak.
Online shopping is turned into a habit and the grocery segment is projected to continue benefiting from it. Retailers are now shifting focus and strengthening their e-commerce arm to meet customer demand.
Online Grocery Sales on the Rise
In a bid to maintain social distance and avoid physical contact since the COVID-19 outbreak, people have been more inclined toward shopping online. This has seen online grocery sales jumping almost every month.
According to the Brick Meets Click/Mercatus Grocery Shopping Survey, $8 billion in online grocery sales were generated in the United States in September. Sales were driven by both pickup/delivery and ship-to-home orders.
The pickup/delivery segment accounted for $6.4 billion in online grocery sales, while ship-to-home totaled $1.7 billion. A total of 64.1 million households or one in every two households in the United States shopped groceries online in September. This marks a 16.1% jump from August 2020.
In September,a monthly average user placed an average of 2.76 orders. This is in comparison toan average of just 2.03 online orders in August 2019.
Online Grocery Market to Grow
Despite the massive vaccination drive, the pandemic is far from over. And even though people have started stepping outside with the economy reopening, they still prefer shopping online given the safety aspects.
This has seen people rely more on e-commerce. According to a new Mercatus/Incisiv study, online grocery sales will surpass 20% of the overall grocery retail sales in the coming five years.
In 2021, online grocery sales are projected to account for 9.5% of total overall grocery sales of $1.097 trillion, jumping 8.1% from $1.137 trillion last year, according to Mercatus’ eGrocery Transformed: 2021 Market Projections and Insight report.
Also, experts believe that e-commerce is here to stay as grocery players are fast shifting focus to the online business. Groceries are necessities and people will continue buying them.
Investing in grocery stocks with a strong online presence should lead to solid returns. We have picked four such stocks, each currently carrying either a Zacks Rank #1 (Strong Buy) or2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Casey’s General Stores, Inc. CASY offers a variety of food selection (including freshly prepared foods such as pizza, donuts and sandwiches), beverages, tobacco and nicotine products, health and beauty aids, school supplies, houseware, and pet supplies.
The company’s expected earnings growth rate for the current year is 3.6%. The Zacks Consensus Estimate for current-year earnings has improved 15% over the past 60 days. Casey’s General Stores has a Zacks Rank #2.
Costco Wholesale Corporation COST sells high volumes of food and general merchandise (including household products and appliances) at discounted prices through membership warehouses. It is one of the largest warehouse club operators in the United States. The company also operates e-commerce websites in the United States, Canada, the United Kingdom, Mexico, Korea, Taiwan, Japan and Australia.
The company’s expected earnings growth rate for the current year is 7.4%. The Zacks Consensus Estimate for current-year earnings improved 4% over the past 60 days. The company has a Zacks Rank #2.
Target Corporation TGT has evolved from being a pure brick & mortar retailer to an omni-channel entity. The company has been investing in technologies, improving websites and mobile apps, and modernizing the supply chain to keep pace with the changing retail landscape and better compete with pure e-commerce players.
The company’s expected earnings growth rate for next year is 37.4%. The Zacks Consensus Estimate for current-year earnings has improved 3.9% over the past 60 days. Target carries a Zacks Rank #2.
Walmart Inc. WMT has evolved from just being a traditional brick-and-mortar retailer into an omnichannel player. In this regard, the acquisitions of Bonobos, Moosejaw and Parcel; the partnership with Shopify and Goldman Sachs; delivery programs like Walmart + and Express Delivery; and investment in the online e-commerce platform Flipkart are noteworthy.
The Zacks Rank 2 company’s expected earnings growth rate for the current year is 15%. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the past 60 days.
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