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Rapid delivery and ecommerce investment to help boost online grocery sales more than a fifth by 2027

Rapid delivery services will help grow online sales over the coming years

Rapid delivery and other ecommerce investments will help online grocery sales growth to outpace the wider sector over the next five years, a new IDG forecast suggests.


The grocery analyst predicts the UK grocery market will grow across all retail channels by 11.3% between 2022 to 2027. That will take total grocery sales to £241.3bn in 2027, from £216.8bn this year.


In 2022, war in Ukraine and rising supply chain costs are expected to mean that food prices will rise by 8.9% in 2022 alone, and the IGD expects shoppers will respond by cutting the amount they spend on food overall.


Caroline Myers, director of retail analysis at IGD, says: “Our new forecast sees growth for all retail channels. Though discount will naturally benefit from shoppers’ desire to save money, growth will be held in check by increasing competitiveness from other channels.”


She adds: “After largely holding on to sale gains from Covid, service investments and the rollout of rapid delivery will boost the online channel further.


“Many shoppers on tight budgets will adopt a more for less mentality – managing their spend closely by trading down to cheaper ranges and pack sizes, switching brands for private label and seeking out the best promotions. Shopping will also be more planned, with many switching to more overtly value-focused retailers.”


Shift online

Ecommerce sales are expected to see some of the fastest growth, rising by £5bn or 22.6% over the five-year period to 2027. That represents a recovery from the dip seen in 2021 as sales subsided from pandemic-driven peaks. The forecast assumes that ecommerce will build momentum from 2025. Growth will come, says the IGD, as retailers boost their order capacity and as rapid delivery services expand. In the short term, however, it expects online and multichannel grocers to focus on profitability ahead of sales growth at a time of rising costs.


Simon Mayhew, head of online retail insight at IGD, says: “Increasing competition will ensure that bricks and clicks retailers continually invest in their online businesses. Quick commerce pure plays and bricks and clicks retailers will continue to expand their rapid delivery operations, enabling online to cater for a broader range of shopping missions, such as food for now and top-up shops. This will attract new shoppers to the channel and increase how frequently they shop.”


Grocery sales through discounters will grow still faster, by £7.1bn, or 23.9%, as retailers in this segment grow their store numbers, and as general merchandise discounters expand their grocery sales. However, the IGD expects that from 2025, ecommerce sales will grow faster than discounter sales.


Growth is expected across channels, from convenience store sales (+13%, or £5.9bn) to supermarkets (+6.2% or £5.7bn) and hypermarkets (+5.2% or £0.9bn).


Myers says: “The outlook has changed most for larger stores, where we expect more competitive pricing and the development of more inspirational store formats to achieve growth, while convenience is well placed to build on the growth achieved during the pandemic. After largely holding on to sale gains from Covid, service investments and the rollout of rapid delivery will boost the online channel further.


by Chloe Rigby

https://internetretailing.net/industry/rapid-delivery-and-ecommerce-investment-to-help-boost-online-grocery-sales-by-more-than-a-fifth-by-2027-igd-24924/

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