As supermarkets initiate more restrictive policies on shopping in their stores due to the coronavirus pandemic, consumers are increasingly turning to online grocers to fill their pantries. And that means they are relying more and more on Walmart (NYSE:WMT) for their supplies.
Already the largest U.S. supermarket chain with over $190 billion in annual sales in its grocery segment, the retail giant is now padding its online lead as well.
The move online
Data analytics firm 1010data says Walmart's online grocery sales surged 21% in March (compared with February), hitting $900 million, which also doubled what it posted during the same period last year.
As physical supermarkets reduce their operating hours, limit the number of shoppers allowed in their stores, and implement one-way traffic in their aisles to maintain social distancing (measures that even Walmart itself has introduced), consumers are finding it more convenient to simply shop for groceries online.
The market researchers at 1010data said Walmart Grocery shoppers initially spent an average of $127 per order, an 11% increase over their typical spending patterns. In March, sales of hand sanitizer quadrupled, while demand for alcohol, cough and cold medicine, and toilet paper more than doubled. In fact, toilet paper became the No. 1 item on Walmart's site, accounting for 3% of total sales for the month, almost triple the 1.3% volume it usually represents.
Yet as the hoarding practices seen in brick-and-mortar stores spilled over into e-commerce, consumers encountered more out-of-stock notices on top items, and their average bill fell to $98.
A new audience for online grocery shopping
Walmart is not alone in seeing a surge in consumers shopping online. Amazon (NASDAQ:AMZN) has seen a sharp increase in traffic on its Amazon Fresh portal and has found it necessary to put new customers on a waiting list as it tries to fill orders from existing customers.
The pressure on online grocery stores comes as the number of people new to such services is rising. First-time usage surged 28% in March, according to Acosta, a consumer packaged-goods sales and marketing agency. It also found that 65% of consumers have changed their shopping habits because of COVID-19.
People are also shopping more often as a result, with a third or more of them placing more orders in March regardless of whether they were picking up the orders or having them delivered.
Walmart has long dominated the online grocery space, much as it has with physical retail. Second Measure, which tracks consumer spending, says that with grocery pickup and delivery in every state, Walmart had by last June 62% more customers than its nearest competitor, which is not Amazon but Instacart, which also offers pickup and delivery for groceries.
That consumers would turn to Walmart in greater numbers during a crisis is not surprising. Its online shopping app has jumped to an all-time high in the number of downloads and is now the No. 1 app on the Google Play store and No. 2 on Apple's App Store.
Changing priorities of the pandemic
As the nature of the pandemic changes, what people are shopping for is also evolving. Walmart CEO Doug McMillon recently noted that where hand sanitizer and toilet paper represented the first wave of panic buying, consumer preferences soon turned to food and consumable goods and then puzzles and games as they were forced to spend more time at home. Now, it's personal care products.
He told the Today show: "People are starting to need a haircut. You see more beard trimmers and hair color, and things like that. It's interesting to watch the dynamic play out."
Nielsen data shows hair clipper sales jumped 166% in the week ending April 4, while hair coloring products were up 23%.
It's a good bet consumers will continue turning to Walmart, which has quickly become the country's lifeline to consumer essentials and even those products that might be less essential.