US grocery predictions reveal $20bn online growth opportunity
The US online grocery market is forecasted to have a compound annual growth rate (CAGR) of 18.1% over the next five years, according to figures released today by grocery research organisation IGD.
This increase represents a $20 billion opportunity. The online grocery channel currently represents 1% of the total US grocery market share.
The overall US grocery market is expected to be worth $1,722bn by 2022, representing a CAGR of 3.6%.
Discount grocery shops are also expected to generate growth, driven by dollar stores and hard discount operators. Meanwhile, the market share of hypermarkets and supermarkets is forecast to slip back over this period as retailers continue to rationalise their store networks, but investment will continue as they focus on ensuring they stay relevant, according to IGD.
The convenience channel will experience CAGR of 3.8% over the next five years
Several key trends are expected to fuel the double-digit growth in the online grocery channel: retailers are using their store networks to offer convenient collection options; meal kit delivery services are growing at a rapid pace; and grocery retailers are partnering with third-party companies, like Instacart and Shipt, to enter the online channel, with relatively lower capital investment.
IGD North America programme director Stewart Samuel said: “The online channel is developing at pace in the US and although many leading retailers have operated online for over 20 years, it is only in the last three years where we have seen an acceleration of investment and activity.
“In the next five years, the online grocery channel will grow by $20 billion, significantly contributing to growth in the US grocery market.”
The convenience channel will experience CAGR of 3.8% over the next five years. Supermarkets and hypermarkets will fall from representing 38% and 24.2% of the total US grocery market respectively in 2017, to 36.9% and 22.9% in 2022.
Samuel added: “We expect hypermarkets and supermarkets to face a more challenging time, with both experiencing a declining market share over the five-year period. However, as sales shift online, both types of store are innovating with new ways to entice shoppers in-store and merge the digital and physical worlds, for example by developing healthcare hubs, investing in their prepared foods and food-to-go ranges and using digital tools to inform, engage and reward shoppers.”
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