The grocery field experienced a significant change during the pandemic. This change was primarily driven by digital advancements. As the industry continues to adapt to these substantial digital changes, the future of the online grocery sector has become a pressing question. The industry’s transformation was heavily influenced by unprecedented challenges. Those include things like safety concerns, fear throughout the pandemic, and inflationary pressures.
Following the initial surge in digital purchases throughout the pandemic, online grocery sales are going to remain important and continue to grow in 2023. The 2022 Performance Scorecard from Incisiv and Wynshop projects digital grocery sales of over $140 billion for the year. Additionally, it’s estimated that about 15% of all grocery sales are going to be digital in 2023, compared to 14% last year. Furthermore, nearly 90% of consumers are more likely to make their grocery purchases with the use of digital ordering in 2023.
AI and robotics
Data analytics, artificial intelligence (AI), and machine learning (ML) have been revolutionizing the grocery field. AI-powered analytics can forecast demand and increase sales. They can also personalize promotions, improve the customer experience, and reduce waste. As a result, grocers are likely to test and deploy robotics and AI capabilities in 2023. The 2022 Performance Scorecard indicates that one in five grocers will explore AI. Meanwhile, one in seven will test and deploy robotics for fulfillment.
Grocers are gradually gaining more control over their digital experience compared to relying on third-party platforms. This share of online sales via third-party platforms has decreased significantly in the last couple of years. Grocers now prioritize their websites as the biggest source of online sales, accounting for about 80% of the total. In terms of delivery, the share of grocers has outperformed third-party delivery services, with a consistent increase over the last few months of the last year. This trend is predicted to continue this year, as grocers strive to exert greater control over their digital operations.
The 2022 Performance Scorecard reveals that almost 80% of respondents consider improving fulfillment efficiency as a top priority for digital investments in 2023. Additionally, nearly 70% prioritize nurturing digital basket size. Over 50% aim to enhance system-wide inventory accuracy. Grocers recognize the importance of optimizing digital operations for greater efficiency, making it a top priority for the year ahead.
The use of mobile devices by grocery shoppers within physical stores is projected to increase by almost 50% in 2023. Furthermore, there is going be an increase of about 15% in pickup orders compared to last year. Additionally, over 60% of grocery retailers are considering or implementing in-house media monetization platforms. These figures suggest a shift towards omnichannel approaches. That means integrating digital and physical shopping experiences to provide customers with a seamless journey.
Right now, over 70% of store employees express dissatisfaction with the digital tools they’re using for picking and communication. This highlights the need for improved store technology. Approximately 80% of grocery store executives believe that upgrading the technology used in their stores is crucial to support digital growth. Furthermore, the lack of technology talent ranks as the third biggest obstacle grocers are facing in 2023, following budget limitations and integration concerns.
While the overall technology budget is expected to shrink slightly in 2023, digital technology spending will continue to increase. Overall, there will be less than 1% reduction in the technology budget compared to 2022. However, over 20% of grocers plan to increase their technology spending on digital initiatives in 2023. This translates to an increase of about 15% in digital technology budgets for those increasing their spending, emphasizing the significance of digital investments.