Report: Food and beverage is the fastest growing online channel
- Global online food and beverage sales will increase 80% over the next five years, according to research firm Euromonitor International.
- This growth will outpace the 73% growth projected for the broader retail industry during the same time period, the firm notes. By 2022, Euromonitor forecasts that global online retail sales will eclipse traditional grocery sales.
- “While store-based modern and traditional grocery retailing combined will remain larger, internet retailing is changing the traditional way of shopping for many products, but especially for groceries,” Michelle Grant, head of retailing at Euromonitor International, said in the release.
While online grocery shopping has grown rapidly abroad, adoption in the U.S. has been sluggish at best. According to a report by RBC Capital Markets, online grocery sales account for just 2%, or $16 billion, of the $800 billion American food retailers take in annually. Compare that to the 7.3% market share retailers in the United Kingdom enjoy, or the 19.7% share in South Korea, and it’s clear U.S. grocers are lagging.
According to a recent Gallup poll, 9% of U.S. consumers say they buy grocers online at least once a month, while just 4% say they do so weekly. In contrast, 83% of consumers say they visit their local grocery store at least once weekly, and nearly all say they visit at least once monthly.
“At this point, online grocery shopping appears to be an adjunct to retail shopping rather than a replacement, as most shoppers whose families purchase groceries online once or twice a month or more say they still visit a store to buy groceries at least once a week,” Gallup noted in a recent release.
On the flip side, there’s major potential for growth over a long period of time in the U.S. Packaged Facts, for one, predicts online grocery sales gains will accelerate in the coming years, with annual growth increasing from 19.4% between 2013 and 2017 to 27.1% between 2017 and 2022. Packaged Facts predicts online grocery sales will be worth nearly $42 billion in 2022 — more than triple the market’s current value.
According to the research firm, three factors are contributing to this sales acceleration: increased mobile phone usage, improved retail websites and interfaces, and the growth of crowd-sourced services that fulfill online orders.
In addition, Amazon’s acquisition of Whole Foods this summer accelerated grocers’ adoption and expansion of e-commerce, with many big names partnering with the likes of Instacart and Shipt.
Despite these growth prospects, analysts don’t see a future in which online sales eclipse store sales. Packaged Facts believes e-commerce’s market share could climb as high as 30%, but anything past that seems tough to imagine given consumer preferences and the distinct nature of grocery retailing.
What this refers to, specifically, is research that shows consumers want to buy fresh products in-store, since they can smell and touch and see what they’re purchasing themselves rather than relying on a “shopper” to do so. And indeed, Packaged Facts’ report shows that 28% of online sales currently goes to canned and pantry goods, while 16% goes towards snacks. However, in third place is produce, with a surprising 14% share.
Grocers have improved their handling and quality checks around produce and other fresh items. If they can continue to build trust with online shoppers in these categories, there’s no telling how high e-commerce grocery sales could go.
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