Online food and grocery sales to jump 163% by 2023, says IGD

Major grocery eCommerce markets will continue to expand rapidly, led by Asia, growing at almost four times the rate of any other sales channel, according to a new study.

Training and research charity IGD, in association with The Consumer Goods Forum, has predicted that online sales of food and grocery items will increase by 163% between now and 2023.

Asia-Pacific’s online grocery market will expand by 196% in that time, it said, adding $198 billion in value, while North America’s is expected to grow by 152% and add $38 billion, and Europe’s is set to jump by 66% and add $21 billion.

By 2023 the Asia-Pacific online grocery market is expected to be worth $299 billion, compared to North America’s $62 billion and Europe’s $53 billion. Currently, according to IGD, Europe ($32 billion) leads North America ($25 billion) in terms of overall value of grocery eCommerce – but they are both someway behind Asia-Pacific’s current $101 billion valuation.

Susan Barratt, CEO at IGD, said: “We believe that plenty of the new emerging models are set to grow and prosper, which means established retailers will need to work hard and swiftly, either to limit their impact or to emulate them.

“The digitisation of the food and CPG industry has already disrupted and transformed the industry, yet the story has only just begun.”

As part of a wider report on the sector, IGD predicted that technology-led strategic partnerships will accelerate rapidly and that tech companies will have a much stronger influence on consumer packaged goods retailing in the next few years.

It also suggested the most advanced traditional retailers will diversify to become less reliant on selling products, and that retailers with the best data capabilities will win in the long term by becoming “incrementally better every single day”.

Indeed, Dunnhumby Media – part of customer data science group Dunnhumby, the engine behind Tesco Clubcard – released its own research today showing that UK retailers are sitting on £1.7 billion worth of unrealised revenues thanks to the datasets they have access to.

Formed using Dunnhumby Media’s Revenue Calculator, a tool that enables retailers to estimate their media revenue potential, the study indicated that retailers have the opportunity to generate an additional 1% of their retail sales by opening themselves up as advertising platforms. The exact monetisation potential by business depends upon a number of factors, such as a retailer’s data and technology maturity, the span of its media coverage across different domains and its multichannel presence, as well as percentage of sales from own label and its willingness to give brands creative freedom in the advertising space.

Tesco, Sainsbury’s and Asda – in that order – have the highest revenue growth potential from using their data to evolve into media players by opening up their assets to advertisers, according to the study.

Jérôme Cochet, global managing director at Dunnhumby Media, commented: “As it stands, only a handful of retailers are taking on the role of publisher. And for them, it’s a smart move, as the media opportunity is a big one.

“Just think of the data and insights generated by browsing and shopping behaviour when compared to the actual products bought, across all the media touch-points retailers own, in-store and online. Over time, more retailers will look to adopt this approach to remain competitive.”

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