In a year that led to a decline in global consumer spending, online grocery bucked the trend. This growth is expected to continue in the short term.
A new report by The Economist Intelligence Unit (The EIU) says online grocery expanded from a small base pre-Covid to account for the lion’s share of online sales in most markets. It also says online grocery will retain its momentum over other categories of goods until at least 2023, when non-food retailing will start to accelerate again.
Combining data and forecasts that cover 58 markets worldwide the special report forecasts growth and assesses key opportunities and risks in online retailing.
It says while the pace of growth in online retailing will slow from 2021, the sub-sector will continue to expand its share of total retail sales—rising from about 10% in 2019 to nearly 20% by 2025.
Much of the growth will be driven by two main factors, including developing markets and the growth of online food and grocery delivery.
While the US will remain a crucial market, much of the growth will come from emerging markets in Asia, Latin America and the Middle East.
According to The EIU, online retailers will need to devise winning strategies in three key areas: adoption of next generation technologies; warehousing and fulfilment; and harnessing a new generation of digital sellers.
Barsali Bhattacharyya, manager of Industry Briefing at The EIU, says there will be both winners and losers from the market transformation, depending on retailers’ ability to shift online and retain customers.
“While companies race to capitalise on the opportunities thrown up by the shift online, many will struggle to be profitable,” he says.
“Besides using the latest technologies to keep a finger on the consumer’s pulse, companies will need to explore which markets offer most potential, all the while navigating increased regulatory barriers, as well as cyber-security and labour risks.”