Peapod expansion shows growth in online grocery shopping

Peapod is opening nine new pickup locations at Stop & Shop stores around Massachusetts and Rhode Island as part of an expansion push in New England, bringing its total number of sites in those states and Connecticut to 27.

The way Americans shop for groceries is undergoing a rapid and dramatic change. Supermarkets will likely continue to exist for a long time, but a growing amount of shopping for food is happening online.

While it's the largest online grocer in the country, Peapod isn't alone. Its competitor in the New York market, FreshDirect, controls about 80% of the New York market for online grocery shopping, and Amazon appears to be looking to move in as well, as it already has on the West Coast.

But there's a lot of innovation in online grocery shopping, too. Last month, Peapod formed a deal with Viroqua, Wis.-based Harvest Moon Farms to deliver organic and heirloom vegetables to customers in the Chicago area. Part of the deal included funding from Peapod for early crop seeds and other supplies, and the company said it would allow customers to buy boxes of produce without having to buy farm shares or be locked into a weekly commitment.

Also last month, one of Peapod's sister companies, the Dutch supermarket chain Albert Heijn, introduced a pickup point at Amsterdam's Schiphol Airport, which allows customers to order items online from wherever they're vacationing and then pick them up upon arrival.

According to a 1,650-person survey released last year by the Food Marketing Institute, 46% of shoppers report never or rarely purchasing groceries online, but 54% say they occasionally do. Online purchases of grocery items typically include such items as health and beauty products, home and pet products, while "very few" shoppers — about 4%, to be exact — purchase fresh foods and produce.

Meanwhile, consumers reported 2.2 weekly grocery trips in 2012, compared with 1.7 in 2011. However, the increases in patronage were in warehouse clubs, drug stores, dollar stores, ethnic food stores and convenience stores, while traditional supermarkets, supercenters, discount stores and limited-assortment stores saw fewer visits.