How Online Grocery and Direct-to-Consumer Models Are Reshaping Food Retail

As companies across the food retail ecosystem grapple with the challenges of e-commerce and changing consumer behavior, Amazon’s acquisition of Whole Foods significantly increases the pressure on traditional grocers, wholesalers, and manufacturers to adapt.

Wednesday, September 6, 2017

For the past two decades, the nearly $800 billion food retail industry, relative to other consumer industries, has been largely unaffected by online competition. The logistical challenges of delivering fresh food over the “last mile” and customers’ reluctance to trust online providers with the task of selecting produce, meat, and other perishable goods have meant that the shift toward online shopping has been relatively slow to materialize in the food industry.

In the past several years, however, the pace of change has accelerated as the industry entered a “third wave” of online grocery and meal-kit delivery and other direct-to-consumer models started gaining momentum. The rate of change reached an inflection point in June, when Amazon announced that it was acquiring Whole Foods Markets for $13.7 billion. We examine how retailers, wholesalers, and manufacturers are responding to the evolving threats and opportunities that e-commerce is creating in the food retail industry.

Highlights include:

  • Amazon-Whole Foods merger increases pressure on grocers and food wholesalers
  • Traditional grocers explore new models for serving shoppers
  • Food manufacturers seek opportunities to sell directly to consumers


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