Boyden Executive Search

The pandemic has altered online shopping habits, creating winners and losers in grocery and restaurant delivery, videogames and leisurewear.

A spate of changes happened quickly, as a direct result of people sheltering in place: Online shopping overall surged in the U.S. beginning in March, with the closure of most physical stores and onset of panic buying. A second surge came after tens of millions of Americans received stimulus checks from the government. Apart from such short-term trends in consumer behavior, there are also broader shifts that could have staying power, and determine the fates of some online sellers.

While many ecommerce companies are doing brisk business, the gains vary by industry and other factors. Grocery stores, which until now had largely withstood the disruptions of ecommerce, stand out. Multiple surveys show that over a third of all Americans have ordered groceries online for the first time in the past month. People are also spending more on online grocery purchases. Within this category, Instacart comes out on top. Its strategy of working with grocery store chains rather than selling its own products has given it a clear advantage.

Other players in online grocery shopping are suffering from an inability to meet demand, which blew up seemingly overnight. The damage could outlast the pandemic. According to data from Earnest Research, which tracks credit and debit card transactions, more established online grocery businesses such as FreshDirect and Peapod have been relatively flat. FreshDirect has also had difficulties maintaining a healthy staff since it focuses mainly on New York, the country’s COVID-19 epicenter. Now Instacart’s real competitors are the giants: Amazon, Walmart and Target.

In its own battle with Amazon, Target gained an advantage from its purchase of online grocery delivery firm Shipt back in 2017, which enabled the discount retailer to offer same-day delivery. Data from Rakuten Intelligence show that recently, Target has managed to pull even with Amazon in terms of delivery time, the New York Times reports.

Online restaurant and meal delivery services, where growth had been sluggish, have also picked up. One of the biggest, Grubhub, is being eyed by Uber as a potential acquisition. However analysts say that its growth has been hampered by a focus on New York, and on independent restaurants. Rival DoorDash has done the opposite, focusing on chain restaurants outside big cities, and is now the industry leader. More familiar restaurants could be a source of comfort to consumers in quarantine.

Video games are booming, as millions of homebound consumers seek diversions. “COVID-19 has ultimately helped boost sales as more people are under lockdown and gaming is a safe and low cost form of entertainment,” said analyst Daniel Ahmad of Niko Partners. Nintendo and Activision Blizzard have been winners in this segment of online shopping, while video game retailer GameStop saw a 1500% increase in online sales for March.

In apparel, the overall growth in online sales has not helped many companies, particularly those focused on business attire. But with so many working from home, a company like Lululemon with a popular line of leisurewear finds itself in the right category at the right time.

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