Top 7 Trends Shaping the Future of Online Grocery Industry in 2023
At A Glance
- 14.4% of all 2022 grocery sales were digital and 63% of all grocery shoppers shopped digitally in 2022
- In 2022, there was a total digital grocery sales of $128 billion
- With such massive digital transformations, what lies ahead has become one of the biggest questions plaguing the minds of the grocery industry in the recent past
- Despite many challenges, experts believe that there are many trends to still look forward to in the coming year
- In this article, we bring some of the trends that will shape the future of the online grocery industry in 2023
The grocery industry witnessed a massive transformation during the pandemic, with digital driving this change primarily. In fact, 14.4% of all 2022 grocery sales were digital and 63% of all grocery shoppers shopped digitally in 2022. In 2022, there was a total digital grocery sales of $128 billion.
With such massive digital transformations, what lies ahead has become one of the biggest questions plaguing the minds of the grocery industry in the recent past. A major chunk of how this change unfolded was determined by unprecedented challenges, be it the safety concerns and a general sense of fear during the pandemic or the roaring inflation post-pandemic.
While it is difficult to see now if any of these challenges will continue to dominate the digital transformation in the grocery space in 2023, many experts believe that there are many trends to still look forward to in the coming year. Here are some of the trends that will shape the future of the online grocery industry in 2023:
Digital sales will continue to grow
After the initial boost in digital sales during the pandemic, digital grocery sales will continue to remain prominent and grow further this year. As per the 2022 Performance Scorecard released by Incisiv and Wynshop, the projected digital grocery sales for 2023 are $146 billion. It is also projected that 15.3% of all digital grocery sales will be digital versus 14.2% in 2022. Further, 87% of shoppers are likely to use digital ordering to make grocery purchases in 2023.
Grocers will own more of their digital experience
Grocer platforms are continually (in the past couple of months) gaining more and more ownership, as compared to third-party platforms. The share of digital sales through third-party platforms has reduced significantly since 2021. Grocers have taken more ownership of their digital experience, and their websites are the primary source of digital sales (75% - 80%). Additionally, even in digital sales via delivery, the grocer delivery share has been faring well over the past couple of months versus the third-party delivery share. In the past three months, the share of grocery deliveries has gone from 23.6% (August 2022) to 26.1% (November 2022). This trend is expected to continue in 2023, resulting in grocers taking more control of their digital experience.
eCommerce will give way to omnichannel
According to the 2022 Performance Scorecard, it is projected that there will be a 47% increase in grocery shoppers using a mobile device in the store to aid their shopping trip in 2023. Also, there will be a 16% increase in the number of pickup orders in 2023 compared to 2022. 63% of grocery retailers are actively evaluating or implementing building an in-house media monetization platform.
Overall technology budgets will shrink
The overall technology budget is expected to shrink, however, spending on digital is likely to continue. The technology budget (Opex) will shrink by 0.7% in 2023 compared to 2022. However, 23% of all grocers will increase their technology spend on digital in 2023 compared to 2022. There will be an 11% - 16% increase in digital technology budgets in 2023 compared to 2022 (for grocers that will increase spending).
Store technology will be continually upgraded
Currently, 73% of store associates are unhappy with their digital tools (picking, communication, etc.). Also, 81% of grocery executives believe upgrading their store technology is critical to supporting their digital growth. Moreover, the #3 challenge facing grocers in 2023 is the lack of technology talent, with #1 and #2 challenges being budget and integration respectively.
Improving efficiency of digital operations will be top priority
According to the 2022 Performance Scorecard, 77% rate Improving Fulfillment Efficiency as a Top 3 digital investment area in 2023. Further, 67% rate Digital Basket Size Nurturing, and 55% rate Improving System-Wide Inventory Accuracy as a Top 3 digital investment area in 2023. Thus, improving the efficiency of digital operations has come up as the top priority for 2023.
Grocers will battle-test robotics and AI
Data, machine learning, and artificial intelligence are revolutionizing the grocery industry. Analytics powered by AI can forecast demand, boost sales, deliver personalized promotions, enhance the customer experience, and reduce waste. Hence, it is quite likely that grocers will battle-test robotics and AI in 2023. The 2022 Performance Scorecard suggests that 1 in 5 will test and deploy AI capabilities in 2023. Furthermore, 1 in 7 will test and deploy robotics for fulfillment.
The grocery industry has been experiencing a pandemic-induced hangover for almost 3 years now and is still undergoing significant changes. One thing is certain as 2023 commences: retailers must continue to adopt digital technology if they want to remain competitive and draw in and keep loyal customers. The ability of technology to boost productivity, spur development, and, when a new generation of consumers starts to emerge, develop a next-generation shopping experience will be critical to the success of grocery retail in the future.