Dive Brief:
- A new Kantar Worldpanel report finds that global grocery sales through e-commerce channels jumped 30% in the past year, reports FoodBev Media. The countries leading growth were China (+52%), South Korea (+41%), UK (+8%), France (+7%), and Japan and the US (both +5%). China is the world’s dominant e-commerce market with online grocery sales of fast-moving consumer goods worth $25.3 billion last year, more than the value of the U.S. and U.K. markets combined.
- Kantar Worldpanel research finds that U.S. online grocery penetration has increased, reaching 30% of the total population. This translates to an estimated $20 billion on food and alcohol bought online this year. The report predicts that the e-commerce share of the U.S. grocery market will increase from 1.5% in 2017 to 8% in 2025.
- Globally, e-commerce currently captures 4.6% of all fast-moving consumer goods sales, a figure that is expected to rise to 10% — or a total market size of $170 billion — by 2025, according to the study.
Dive Insight:
There are a lot of projections floating around on grocery e-commerce's market size, level of penetration, market share and projected growth. But there are some things everyone seems to agree on — namely, that grocery e-commerce is here to stay, that penetration of the U.S. grocery market is growing, and that the projected size of the prize could be huge.
The latest findings from Kantar Worldpanel appear in line with some notable e-commerce forecasts, and more conservative than others. For example, Unata’s 2017 Grocery eCommerce Forecast expects 31% of U.S. consumers will order groceries online this year, a 19% increase from last year. Kantar Worldpanel’s estimated 30% penetration jibes with these figures. In its latest “Ecommerce Supermarket Scorecard Report,” consulting firm Brick Meets Click found online grocery sales growing at 25% per year, which is quite a bit faster than Kantar Worldpanel’s 5% growth rate.
In what could be one of the most widely circulated forecasts on U.S. online grocery, a joint study from Nielsen and the Food Marketing Institute found that 30% of digital shoppers say they spend about a quarter of their food budget online today. The forecast calls for rapid change ahead in a relatively brief time period. By 2025, the firms project that 60% of digital shoppers will buy a quarter of their groceries online. Online grocery sales could exceed $100 billion by 2025, representing about a 20% share of the total $525 billion that will be spent on food.
Conservative versus aggressive forecasts aside, the point is that online grocery will grow at a rapid clip in the coming years and take share away from conventional grocery formats, including supermarkets, supercenters and other traditional grocers. This is exactly why retailers nationwide are racing to figure out online shopping and fulfillment models, experimenting with both home delivery and click-and-collect models.
The expansion of click-and-collect programs by market leaders Walmart and Kroger have been well documented. Regional powerhouses like H-E-B and ShopRite are ramping up their services, too. And a growing roster of retailers — Bashas, BJ’s Wholesale, Costco, Meijer and Wegmans among them — are inking deals with online delivery services Instacart and Shipt.
Analysts generally agree that click-and-collect will emerge as the dominant online grocery format across America. The number of grocery stores offering click-and-collect grew from 15% in 2015 to 23% in 2016, according to Progressive Grocer.
While still in its infancy in the U.S., click-and-collect has reached maturity in some parts of Europe, including France and the U.K. As a result, e-commerce growth is slowing down in Europe, as the Kantar Worldpanel study aptly points out. Comparatively, though, the U.S. grocery e-commerce market is just getting off the ground, and expected to quickly approach a high-growth phase.
Some categories will get there quicker than others. For example, center store categories are rapidly moving online, with an estimated 40% of center store volume expected to migrate online by 2025, according to Nielsen and FMI research. It’s seems only a matter of time before e-commerce reaches enough critical mass in the U.S. to be “just another” grocery shopping channel. For now, though, that time still seems a ways off.