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E-Commerce Continues to Drive Online Grocery Sales: 4 Picks

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E-commerce has been a live saver for retail sales during the pandemic and just over a year down the line, people are more comfortable shopping online. The pandemic saw people stocking up on necessities like grocery, made easy bye-commerce.

At the same time, it also saved millions of businesses from shutting down as physical stores remained closed for weeks and then failed to attract footfalls for months. Although the vaccination drive is in full swing and restrictions are gradually being eased, people have finally realized the comfort and convenience of shopping online.

Rapid Growth for Online Grocery Sales

According to Mercator Advisory Group, overall online grocery sales reached $106 billion in 2020, increasing more than 300% on a year-over-year basis.

This shows how the pandemic changed the entire concept of shopping with technology coming as a big savior. Although people shopped almost everything online, grocery was the most important segment. Online grocery sales accounted for 10% of the overall grocery market last year.

Online Grocery Market to Grow

The Mercator Advisory Group predicts that online grocery sales will grow further over the next few years. Although e-commerce has been there for a long time, most Americans preferred shopping from physical stores. However, these physical stored despite the economy’s reopening are still not being able to attract footfall like the pre-pandemic level, as people have finally understood the benefits and comfort of shopping online.

The report says that online shopping will account for 20% to 25% of the overall grocery market by 2025. The present market share could double to $250 billion by that time.

Also, grocers are increasingly shifting focus on pick-up and delivery facilities as people are hesitating to step out of their houses. According to eMarketer, online grocery sales are projected to reach 147.4 million by 2023.

Our Choices

Target Corporation (TGT - Free Report) has evolved from being just 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 the current year is 28.5%. The Zacks Consensus Estimate for current-year earnings has improved 39.6% over the past 60 days. Target sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Walmart Inc. (WMT - Free Report) 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; partnership with Shopify and Goldman Sachs; delivery programs like Walmart + and Express Delivery; and investment in online e-commerce platform Flipkart are noteworthy. 

The company’s expected earnings growth rate for the current year is 8.6%. The Zacks Consensus Estimate for current-year earnings has improved 9.8% over the past 60 days. Walmart has a Zacks Rank #2 (Buy).

Dollar General Corporation (DG - Free Report) is one of the largest discount retailers in the United States.  It offers a wide selection of merchandise, including consumable items, seasonal items, home products and apparel.

The company’s expected earnings growth rate for the next year is 9.8%. The Zacks Consensus Estimate for current-year earnings has improved 7.2% over the past 60 days. Dollar Generalhas a Zacks Rank #1.

Costco Wholesale Corporation (COST - Free Report) sells high volumes of food and general merchandise, including household products and appliances, at discounted prices through membership warehouses.

The company’s expected earnings growth rate for the current year is 17.2%.The Zacks Consensus Estimate for the current year earnings has improved 4.5% over the past 60 days.  Costco carries a Zacks Rank #2.

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