Reddit reviews Axiom Folding Rear Pannier Basket Black

I think the backpack is too big and heavy for a front basket.

I was thinking either a rear basket similar to a milk crate like you suggest. The downside is that he's short so his seat is slammed and a basket/crate would be right at his back and make it difficult to get on and off the bike. That's what led me to considering a folding side basket in the position of a pannier (like this).

Have you looked at foldable metal panniers? I love mine, though not the same as the ones in the link. Only drawback with mine is the outside panel can pop open sometimes when unfolded - so I always have a couple little bungees in my backpack to secure them.

For a shopping bike you could just use a commuter, with a back rack and add two of those or something alike that you can remove. Unless you are shopping for a big family you should be fine with this. I am thinking of doing that with my commuter myself.