The online grocery sector is on track for steep sales growth between 2019 and 2024, driven by the expansion of fulfillment options and online assortment being offered by industry leaders Amazon.com Inc. and Walmart Inc., a new study says.
Store-based sales will continue to account for the majority of worldwide "edible grocery" sales over that period, but online sales are poised to grow much faster, according to London-based e-commerce analysis company Edge by Ascential.
Online grocery sales currently total just 3.25% of the global grocery sector, or $91 billion of the $2.8 trillion annual sales of the food & beverage category; ambient groceries, fresh groceries, carbonated drinks, fruit drinks, water, hot beverages, beers, wines and spirits.
However, grocers are investing in rapid digital transformation that could drive a compound annual growth rate (CAGR) of 13% through 2024, for a total of $162 billion by the end of the forecast period. The report did not cite the growth rate for brick and mortar-based grocery sales.
The report meshes with recent reports that the growth of online grocery sales is already pushing hot demand for cold-storage warehouses throughout the U.S. And to handle final-mile grocery delivery, automated fulfillment vendors such as Cleveron AS, Takeoff Technologies, and Ocado Group plc are developing refrigerated, robotic parcel lockers and super-dense, urban DCs.
The frantic pace of growth in the sector is being whipped up by a race for global grocery supremacy between Amazon and Walmart, which are forecast to generate e-commerce grocery sales of $15 billion and $14 billion, respectively, by 2024. Those figures will be more than twice as high as their nearest rival, Costco, Edge by Ascential said.
Although driven by competition, the companies are not simply throwing money at the problem, but are seeking to curb their investment in the complex supply chains that come with delivery services, even as they strive to continuously attract shoppers to physical stores.
To hit both goals at once, many retailers are investing in fast, store-based fulfillment or are teaming up with third parties for improved last-mile logistics, said the Edge by Ascential report. Thanks to that rising profile, fulfillment intermediaries are becoming influencers for product discovery and brand selection, and are enabling e-commerce operations for low-cost formats such as discounters, which would otherwise not sell groceries online.
"We're going to see a major shift to online and omnichannel over the next few years with edible grocery," Violetta Volovich, associate analyst and report author for Edge by Ascential, said in a release. "The barriers to adoption and growth in this sector are coming down, and retailers are investing heavily in technology, supply chain and partnerships that will make for an easy, seamless customer experience."
Online sales are poised to grow much faster as leading #retailers continue to prioritize #ecommerce in the edible grocery categoryhttps://t.co/QUDHhuwITI #winwithdata pic.twitter.com/4598Q60TVm— Edge by Ascential (@EdgeAscential) September 3, 2019
Copyright ©2023. All Rights ReservedDesign, CMS, Hosting & Web Development :: ePublishing