The Institute of Grocery Distribution (IGD) has released its latest Online Retail Trends Report, which showed that online is set to remain the fastest growing retail channel globally through to 2029.
The report revealed that this growth will add $164 billion in sales, bringing the channel’s total to $646 billion by 2029. IGD said it is also expected to gain the most market share of all modern grocery channels, increasing by 0.5% to reach 6.3%.
It highlighted that while Asia will lead in absolute sales growth, Australasia will see the fastest growth rate, and North America will remain a hub for innovation, with Walmart and Amazon “continuing to dominate”. However, this growth comes with profitability challenges, said IGD, and as online penetration deepens, grocery retailers are under pressure to manage rising operational costs and protect margins.
Michaela Jay, insight manager at IGD, commented: “The way people shop online is different to how they shop in-store, so this is a critical channel to get right. Speed, ease, and convenience are more important than ever to shoppers, which is why online continues to grow rapidly. But with disposable incomes under pressure and the perceived higher costs associated with online, retailers must continue to deliver great value and service to maintain momentum.”
Retailers must increase profitability
To sustain growth and improve profitability, the report urges retailers and suppliers to focus on emerging revenue levers and offset operating costs through four key trends:
- Retail Media: Monetising digital advertising space and shopper data
- Quick Commerce: Meeting demand for rapid delivery
- Fulfilment: Reducing last-mile costs and improving efficiencies
- Added Services: Providing deeper shopper engagement, loyalty and differentiation
How retailers and suppliers should respond based on the four trends will differ depending on how advanced their ecommerce business is, IGD stated. This is brought to life through actionable implications in the report, which highlights the initial steps needed to define the online strategy and the next steps to take to evolve the online strategy in a profitable way, for both retailers and suppliers.
The report also explores the critical role of online in enabling unified commerce – the seamless integration of digital and physical retail. It identifies the core capabilities that underpin this future and benchmarks how leading global retailers are progressing. As the industry moves toward a more connected and shopper-centric model, businesses must begin laying the groundwork today, said IGD – aligning internal operations with evolving customer expectations to stay competitive tomorrow.
