Online grocery commerce has experienced rapid expansion in recent years, with new data suggesting it will remain the fastest-growing retail channel globally through 2029.
IGD’s latest Online Retail Trends Report reveals that this growth will add $164bn in sales, bringing the channel’s total to $646bn by 2029. It is also expected to gain the most market share of all modern grocery channels, increasing by 0.5% to reach 6.3%.
The report highlights that while Asia will lead in absolute sales growth, Australasia will see the fastest growth rate, and North America will remain a hub for innovation, with Walmart and Amazon continuing to dominate. However, IGD noted that this growth comes with profitability challenges. As online penetration deepens, grocery retailers are under pressure to manage rising operational costs and protect margins.
“The way people shop online is different to how they shop in-store, so this is a critical channel to get right,” said Michaela Jay, Insight Manager at IGD.
“Speed, ease, and convenience are more important than ever to shoppers, which is why online continues to grow rapidly. But with disposable incomes under pressure and the perceived higher costs associated with online, retailers must continue to deliver great value and service to maintain momentum.”
To sustain growth and improve profitability, the IGD report urges retailers and suppliers to focus on emerging revenue levers and offset operating costs through four key trends:
- Retail Media: Monetising digital advertising space and shopper data.
- Quick Commerce: Meeting demand for rapid delivery.
- Fulfilment: Reducing last-mile costs and improving efficiencies.
- Added Services: Providing deeper shopper engagement, loyalty and differentiation.
The study notes that there are varying levels of maturity in the online space. While some businesses have established strategies, others are still developing and evolving their online business plans. How retailers and suppliers should respond based on the four trends will differ depending on how advanced their e-commerce business is. This is brought to life through actionable implications in the report, which highlights the initial steps needed to define the online strategy and the next steps to take to evolve the online strategy in a profitable way, for both retailers and suppliers.
The report also explores the critical role of online in enabling unified commerce – the seamless integration of digital and physical retail. It identifies the core capabilities that underpin this future and benchmarks how leading global retailers are progressing. As the industry moves toward a more connected and shopper-centric model, IGD says: “Businesses must begin laying the groundwork today – aligning internal operations with evolving customer expectations to stay competitive tomorrow.”
