By 2040, 95% of grocery purchases are projected to be made online according to a recent article by @NeilsenIQ.¹
95%!
Yet today, online food sales in the US are only 10.7% of the dollar volume of in-store sales¹ In Canada, the total online grocery sales volumes are higher at 17%, with the grocery delivery market revenue growth expected to be 13.5% in 2025². While this leaves much room for growth over the next 15 years, the online grocery market is rapidly evolving, fueled by changing consumer habits, advanced technology, and increased competition. The leading emerging trends shaping the future of online grocery sales include:
- Convenience: The ease of getting groceries delivered right to your home is a huge draw for consumers.
- Subscription services: The growth of subscription models for routine grocery deliveries are becoming increasingly popular.
- Health and Wellness: More consumers are prioritizing health, leading to higher demand for nutritious products that are available only online.
- Personalization: Online platforms excel at offering personalized discounts and product suggestions based on shopping behavior.
- Product Assortment: The variety of products available online often surpasses that of physical stores.
- Tech Improvements: Advances in technology, such as better apps and websites, are enhancing the online shopping experience.
- Competitive Pricing: Online grocery stores frequently offer attractive pricing and discounts.
- Shifts in Shopping Habits: More consumers are getting comfortable with the idea of shopping for groceries online.
Impact on Retailers and CPG Companies
The growth of online grocery sales will ultimately have a huge impact on retailers and CPG companies. Retailers will need to consider investing in technologies like AI and machine learning to enhance the shopping experience and optimize operations. They will need to adopt autonomous delivery vehicles and drones to improve last-mile logistics such as making deliveries faster and more cost-effective. Finally, retailers will need to expand into underserved areas tapping into new customer bases to increase their market share.
CPGs will need to enhance their digital presence and capabilities to ensure their products are easily discoverable and appealing in digital marketplaces. The shift to online sales will require CPGs to rethink their supply chains in terms of inventory management and adapting packaging for direct-to-consumer shipping. Finally, CPGs will need to become more proficient at leveraging data from online sales to gain valuable insights into consumer preferences and behaviors, allowing them to personalize their offerings more precisely.
As we navigate this dynamic landscape, it’s crucial for both retailers and CPGs to stay ahead by embracing changing consumer buying habits and technological advancements. The future of online grocery is bright, and those who innovate will lead the way.
¹Source: Neilsen IQ August 2024
²Source: Statista September 2024
