July 21, 2008
Car Trips Replaced By Online Shopping

Among the many ways people are adjusting to higher fuel costs: more online shopping.

“With gas being such an issue, we know that mall traffic is down more than off-mall traffic,” said Mike Boylson, chief marketing officer for J. C. Penney, which had an 8.7 percent increase in Internet sales in the first quarter of this year.

That is in contrast to a 7.4 percent decrease in sales at stores open at least a year, known as same-store sales and a measure of retail health. “We see more people turning to online because it’s much more efficient in terms of time and money,” Mr. Boylson said.

...

Victoria’s Secret, too, has had an online sales increase. Its catalog and Internet sales were up 11 percent in the first quarter of this year while same-store sales declined 8 percent, according to Maggie Taylor, vice president, senior credit officer at Moody’s Investors Service.

Gap had an 11 percent decline in same-store sales in the first quarter, but a 21 percent increase in online sales.

People go on some errands to places that require their physical presence such as a dentist's office. Those sorts of trips are harder to avoid. But grocery store trips are especially interesting when it comes to energy savings because those trips are just to retrieve bags of goods and everyone needs to retrieve those bags of goods from a fairly small number of grocery stores. Each person drives to the store to buy food and then drives back. Well, I see my nearby neighbors at the local grocery store. We are all going to the same place and starting at nearby places. I happen to walk. But inside of the local store I have met multiple neighbors who all drove. That's a lot of duplication. Add in the labor of a delivery person and one vehicle trip could carry pre-ordered groceries to many homes. But the labor costs and the loss of ability to choose exactly what you want by sight still make that a rarely used option.

Even if the price of gasoline quadruples people will have many ways to keep going to grocery stores. They can just shift to smaller cars, make fewer trips to buy more at once, and maybe share rides with neighbors. But in theory neighborhood delivery could make a come-back. After all, only a few decades ago milk delivery trucks were commonplace. Why not grocery delivery trucks?

Oil exporters and the rising Asian wealthy do not need to adjust and so they are splurging on private jets.

Even as high oil prices crimp airline orders for big passenger planes, business-jet sales are booming. Deliveries are expected to top 1,200 this year, the third consecutive record year for the industry, and most analysts predict the numbers will keep rising at least until 2010.

...

Who is buying all those planes, which start at around $3 million and can run well over $40 million? Many customers come from the growing ranks of the ultra-rich in Asia, the Middle East, and Russia.

This trend won't continue even 10 years. In the early years of the post-peak oil period revenues from oil sales will rise even as production and exports decline. Rising prices will cancel out the effects of fewer barrels sold. But once the decline gets further along revenues from oil sales will plummet and so will the money available for oil sheikhs to cruise around in private jets. Still, the private jet market will boom for longer than the commercial jet market before following the commercial jet market downward.

Share |      Randall Parker, 2008 July 21 10:27 PM  Energy Lifestyle


Comments
Mthson said at July 22, 2008 6:59 AM:

Safeway apparently has a very developed grocery delivery service. Their video tour looks fascinating: http://shop.safeway.com/register/default.asp?brandid=1

There are similar efforts to Webvan in some regions: http://en.wikipedia.org/wiki/Webvan#Similar_businesses

Googling my area (San Francisco) and grocery delivery showed some other services as well, including one from an organic food store.


I already use Amazon for many of my purchases; they're partnered with an enormous variety of stores, such as target, so they're a quick portal for just about any non-perishable products.

Tom said at July 22, 2008 7:30 AM:

Here in Belfast my local large store is Tesco.
Now days I always shop online with them, and have my groceries delivered home when I come home from work.

Kralizec said at July 22, 2008 8:02 AM:
Why not grocery delivery trucks?
I understand the grocery business is already low-margin.
Tom said at July 22, 2008 9:09 AM:

Also expect smaller, more local stores - the return of the corner market. I pass the local supermarket every day. It's not the biggest or cheapest, but it's convenient.

Nick G said at July 22, 2008 9:30 AM:

I use Peapod, which works very well.

Vince said at July 22, 2008 10:03 AM:

Grocery shopping seems to be one of those things that doesn't save all that much money per-capita to pool transport on. For most people in most cities, the nearest grocery store is but a mere block or two away. What you're losing in terms of convenience you're not making up on in economy. It's easy to simply bundle the grocery shopping trip with the trip to the nail salon, or do it on the way back from work, as, even if you would have to go out of the way to go to your local store, surely there's one near to your work.

This post seems to be making a mountain out of a molehill, to me anyway. None of it will matter as soon as you can use PHEVs to make small trips ultra efficiently.

Greg said at July 22, 2008 1:19 PM:

I tried this in 2004. It didn't work for me. Not to say it wouldn't work for anyone else. I missed the freedom of going wherever I wanted while I was without my wheels.

Randall Parker said at July 22, 2008 8:10 PM:

Vince,

Regards PHEVs: GM will make ten thousand their first model year and sixty thousand their second model year of the Chevy Volt PHEV. I'm not expecting significant numbers of them till 2014 or beyond.

As for city shopping: Most people (at least in America) do not live in cities. I'm thinking suburbanites. Though I know people in NYC who get food delivery because they don't own a car.

Bob Badour said at July 23, 2008 12:42 PM:

The private jet thing is interesting. As the major airlines reduce routes and make things less convenient than they are now to reduce fuel costs, the very rich are going to have even more incentive to buy private jets.

That, in turn, will reduce the demand for expensive business class tickets forcing the airlines to make things even less convenient for the rest of us.

Nick G said at July 25, 2008 2:40 PM:

Randall,

There are a lot of companies lining up to produce PHEVs and EVs in 2010: GM (VUE and Volt) and Toyota are the biggest, but Honda, VW, Nissan, the list is very long. I think we'll get larger volumes in 2011, and real volumes in 2012.

RE: upcoming battery tech: this is interesting, and the comments discussion is good:

http://www.greencarcongress.com/2008/07/new-li-ion-spin.html#more

Randall Parker said at July 25, 2008 4:49 PM:

Nick G,

Toyota's PHEV in 2010 is only for fleet customers and so that looks like an obvious attempt to just say they have something without being ready. Where has Toyota said what their initial range will be on electric power?

I realize a lot of companies have made an internal resource commitment to PHEVs. But in 2011 I expect volumes to still be limited. I would like to be wrong since I think the price of oil is going to hit new highs by 2011 and probably much sooner.

ActaCell: They are experimenting with nanomaterials. Well, a lot of interesting and potentially useful nanomaterials exist that are only produced in experimental quantities because solutions for mass manufacture haven't been discovered yet. Does ActaCell have that problem? Hard to tell from that description. I wouldn't take VC money as a reliable indicator that they've got something that can get productized quickly. Maybe.

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