Food and beverage will lead online sales growth through 2024, says Forrester
- Food and beverages will be the fastest growing online sales category over the next several years, with a compound annual growth rate of 30% over the period 2019 to 2024, according to a recent report from Forrester.
- Forrester expects share of digital in category to rise from 5.4% to 10.4% between 2020 and 2024 and will generate 17% of all ecommerce sales in the United States by 2024.
- The projection highlights the long-term, high growth path of online grocery shopping after the pandemic caused many consumers to rely on pickup and delivery.
Food and beverage dominated all categories of online sales growth in 2020, with gains in the channel more than doubling to 75% by 32% in 2019. The second highest growth category was pets, with e-commerce sales increasing 46%.
Online sales on Kroger, Walmart and Target nearly doubled last year, while Instacart increased the number of businesses using its platform by 17%, Forrester reported.
As consumers get vaccinated and resume their normal shopping habits, these staggering numbers are starting to moderate. But growth will remain well above historic averages, noted Forrester and others, as consumers embrace new digital habits and corporate innovations in grocery shopping.
These digital habits will spread to many other categories as well, with categories like toys, clothing, personal care and furniture expected to see double-digit annual growth by 2024. Forrester estimates that online sales in the clothing category will reach 47.5% by 2024.
This new high standard is pushing grocers to invest in a channel that remains unprofitable for most. Even though they are spreading a message about their willingness to serve shoppers where and when they want to shop, behind the scenes they struggle to integrate automation, differentiate themselves from the competition, and strike a judicious balance between the management of their own operations and the use of third parties. markets like Instacart and Doordash.
Grocers can at least take comfort in the fact that their stores are expected to generate the vast majority of sales. Forrester has estimated that 72% of retail sales will go through stores in 2024.
Ultimately, retailers need to figure out how to effectively balance their stores and digital properties, Forrester noted, so that each channel improves the other and drives overall sales as well as customer loyalty. While investments can be painful and the digital learning curve steep, retailers must come to grips with these new buying behaviors or risk losing sales to the competition.