Online food and grocery boom

Online food and grocery boom

The online food and grocery sector is set for significant growth and transformation, according to new research from IGD and The Consumer Goods Forum.

In a statement issued today (31 May), IGD said it was forecasting the following growth rates in three “critical” markets:

  • UK: online grocery sales to grow by 48% by 2022 and account for 7.5% of the total UK grocery market
  • China: online grocery sales to grow by 286% by 2022 and account for 11.1% of the total Chinese grocery market
  • US: online grocery sales to grow by 129% by 2022 and account for 2% of the total US grocery market

IGD said that there were three main reasons why “no grocery retailer or supplier can afford to downplay online retail”:

  1. Across most of the world, online is already a fast-growing channel
  2. Online and offline are merging, with an online store vital to complement physical stores
  3. The digital world evolves faster than the physical one and online stores will become increasingly compelling

Despite these “compelling” reason to embrace e-commerce, IGD said that “over half (54%) of food and grocery businesses only [are] just starting to prepare for tomorrow’s digital transformation and 11% [are] yet to begin”.

Simon Mayhew, Online Retail Insight Manager at IGD, said that the stores of the future will have a much more sophisticated approach to data and use Artificial Intelligence (AI) to much greater effect.

“Smarter devices will make shopping simpler and more inspiring,” said Mayhew. “The online store will help stop you running out of products. Shoppers will subscribe to have their favourite products delivered regularly and AI will predict when you may run out and make or suggest a reorder. Household devices, such as washing machines, will connect to your store and reorder when necessary. This will lock in customer loyalty.

“The online store will offer more than just groceries, it will also help around the house. With populations urbanising and tending to live in smaller properties, businesses will offer services that prevent the need for space-hungry appliances, such as home cleaning and laundry.”

Mayhew added: “For retailers and manufacturers, the online store of the future provides both opportunities and challenges. Data from the online store will guide product development. Retailers will see gaps in their ranges through unfulfilled search requests and have a better understanding of product quality through ratings, reviews and feedback to chatbots. Fulfilment will benefit from robotics and supply chain forecasting will be more accurate. This will mean online pickers have fresher products to select, helping overcome one of the biggest barriers to shopping online. Unattended deliveries to homes, cars, and even ‘straight to the fridge’, will grow in popularity.

“Improvements in service will reduce the number of returns and make deliveries quicker. We will see greater collaboration in the supply chain, including manufacturers pooling resources to sell directly to consumers. However, there will also be new challenges and potential inefficiencies. Shoppers will expect faster deliveries, and this means smaller, more frequent orders.”

To download IGD’s free report, go to: http://www.igd.com/futureonline

About The Author

Ian Taylor

Ian Taylor is the Editor of Triangle’s Mail & Express Review Magazine and the www.postandparcel.info portal. Ian has been a business journalist for almost 30 years, editing and writing for a wide range of magazines and newspapers with a particular focus on the transport and logistics industries.

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