Online Grocery Delivery’s Massive Hidden Opportunity
Grocery shopping isn’t my cup of tea, so to speak.
Actually, shopping in general isn’t something I really enjoy.
Where brick-and-mortar stores are concerned, I only shop if it’s something I really need. On those rare occasions, I run into the store to buy those exact items and run out.
That’s why I started ordering groceries online and having the items delivered to my home.
I’ve done this so many times now, I’ve lost count.
Apparently, I’m not alone.
The online grocery ordering business is BOOMING.
Disruptors in the Online Grocery Market
According to Supply Chain Dive, the Food Marketing Institute and Nielsen predict online grocery orders will account for 13% of all grocery sales by 2022, up from a mere 3% in 2018. This growth is projected to add an additional $100 billion in annual online grocery sales.
The innovators and disruptors in the online grocery market know this, and the growing competition is fierce.
Take Instacart, for example.
Instacart, founded in 2012, is a U.S.-based technology company that specializes in same-day grocery delivery and pickup services. Its clientele includes grocers such as Publix, Wegmans, Kroger and Aldi, as well as big-box stores such as BJ’s and Costco.
In the past six months, Instacart has broken away from its competitors.
After months of surveying customers and running extensive pilot programs, it has nationally launched Instacart Pickup, a store pickup service.
Per Supermarket News, the grocery technology company has “tripled the number of states and doubled the number of locations and retailers offering the service.”
But there’s more to the story.
While many people are focusing on the burgeoning online grocery delivery business, there’s a hidden industry that’s set to truly reap the benefits of this disruption.
CBRE recently published a report shining a bright spotlight on the huge profit potential in cold-storage expansion.
According to the report, growing online grocery sales are generating big demand for cold-storage warehouses.
Currently, U.S. cold storage amounts to 214 million square feet. The demand is so great that up to 100 million square feet of additional cold-storage space is needed by 2023.
As this chart from Grand View Research shows, North America’s cold-storage market size is poised for unprecedented growth.
Matthew Walaszek, associate director of CBRE, framed this budding growth like this: “Few sectors of commercial real estate will undergo as much transformation in the coming years as the cold-storage industry due to e-commerce’s impact on this previously underpenetrated market.”
In an interview with Supply Chain Dive, Walaszek also stated: “There are some folks who believe the grocery store is not going to go away. But we may see more of a hybrid grocery store model, with a smaller footprint on the front end and larger distribution and fulfillment functions in the back end, to compensate for this shift.”
Your Hidden Stock Play
To get in on this disruptive industry, Americold Realty Trust (NYSE: COLD) is a good way to invest.
Per Bloomberg, Americold provides temperature-controlled food distribution services. The company serves food producers, processors, distributors, wholesalers, retailers and restaurants worldwide.
Over the past year, Americold’s total return of 51.3% has trounced the Nasdaq Composite Index, Dow Jones Industrial Average and S&P 500 Index.
Everyone’s shopping habits are different. But there’s no denying that online grocery shopping is here to stay.
It’s up to cold-storage facilities to help them thrive.
Until next time,
Director of Investment Research, Banyan Hill Publishing