2022: Digital Grocery Year in Review
At A Glance
- $128 billion in digital sales in 2022, with 14.4% of all sales coming from digital
- Grocers lost nearly $300 million in margin on digital grocery in 2022
- Average price per item in a digital order increased by a staggering 21%
- 15.3% off all grocery sales projected to come from digital channels in 2023
- “State of Digital Grocery 2022 Performance Scorecard” explores the year that was and provides insight on what 2023 holds for grocery
2022 was a tumultuous year in grocery, with acquisitions, labor struggles, changing shopper demand, digital disruption, and more altering the competitive landscape. But it was also an exciting year, as grocers embraced new operational models and next-gen technology to keep pace with changing demand.
Grocery Doppio’s “State of Digital Grocery 2022 Performance Scorecard” explores the year that was and provides insight on what 2023 holds for the evolving segment. The report examined 1.7 million shopper orders, surveyed nearly 24,000 shoppers, and examined 2,390 grocery executives over the course of 2022. For the year-end report, Grocery Doppio compiled and analyzed the results for this annual look back at the past 12 months. Below is a quick look at some of the key findings, the full report is available for free here.
Digital Sales Stabilized
While digital sales have pulled back from their COVID-induced high-water mark, consumers continue to rely on the ease and convenience of digital grocery shopping. Overall, the industry collected $128 billion in digital sales in 2022, with grocers reporting that 14.4% of all sales were digital. In addition, 63% of shoppers purchased groceries digitally at least once over the past year.
Offering seamless solutions to capitalize on this new digital reliance is a business necessity for grocers, but unfortunately most have been unable to turn digital sales into digital profits. Due to operational and fulfillment costs the industry lost nearly $300 million in margin on digital in 2022.
While shoppers continue to enjoy the convenience of digital shopping, the rising cost of goods has put a dent in the volume of their transactions. Thanks to ongoing inflation the average price per item in a digital order increased by a staggering 21%. To help keep the final checkout price under control, shoppers reduced the average number of items in their digital basket — during peak spending reduction in June and July the average number of items in a digital order reduced by six on average.
End of the Year Push
The end-of-the-year is always a busy one for grocers, as shoppers stock up on food and drink for the busy holiday season, and 2022 was no exception.
Unfortunately, 58% of consumers report that they had to spend more than they did last year for holiday supplies, with 62% buying less than they wanted to because of inflation-fueled price increases.
Despite rising costs, consumers continued to embrace digital grocery shopping this past holiday season but made one meaningful change. To help keep the final cost of their digital order low, many shoppers opted to pick up their digital order in-store instead of having it delivered to their home. Sixty-five percent of those shoppers surveyed report that they chose pickup over deliver to avoid delivery fees, which resulted in a 43% increase in digital pickup in Q4 compared to Q3.
2023 Digital Outlook
We asked grocers for the top business challenges they will face in 2023 and not surprisingly, increasing inflation topped the list. Ninety-one percent of grocers named inflation as a top concern, which considering the average price per item in a digital order increased by 21% in 2022 is not at all eye-opening. Joining inflation at the top of the challenges list were rising workforce costs, product availability, and a reduction in shopper spending.
Digital will return to growth mode in 2023, with 15.3% off all grocery sales projected to come from the digital channel, up from 14.4% in 2022. In addition, 87% of all shoppers will utilize digital ordering to make grocery purchases in 2023.
In response to this projected uptick in digital activity, 23% of grocers plan to increase their tech spend on digital in 2023. This is a significant commitment considering that overall grocery tech budgets are expected to decrease by .7% in 2023. The top areas for digital investment in 2023 are fulfillment efficiency, basket size nurturing, and improving system-wide inventory accuracy.
Dive Deeper into 2022 Performance and 2023 Predictions
For more insider insight on grocers’ 2022 performance and what the next 12 months has in store for grocery be sure to check out Grocer Doppio’s “The State of Digital Grocery: Year in Review and Outlook” webinar. The session features Barry Clogan, Wynshop; Doug Baker, FMI; and Gaurav Pant, Incisiv. The panel discusses the grocers’ digital performance, changing consumer behavior, investment activity, as well as the key trends that will shape the industry in 2023.