Online grocery is no longer a bolt-on convenience – it’s a strategic imperative. As the fastest-growing channel globally, it’s reshaping how people shop, what they expect, and how retailers must operate. Those who fail to adapt risk being left behind.
At IGD, we forecast online grocery will grow at a CAGR of 6.0% between 2024 and 2029, adding $164bn in sales and reaching $646bn globally. In the UK, we expect online to reclaim its position as the fastest-growing channel, driven by improved infrastructure, slicker user experiences, and the rapid expansion of quick commerce.
The profitability question
Of course, growth alone isn’t enough. The real challenge – and opportunity – lies in profitability. Despite rising penetration, many online operations remain unprofitable.
As an analyst, I’ve seen a shift in how businesses talk about online. It’s no longer just about ‘being present’ – it’s about performance. The most forward-thinking retailers are treating online as a growth engine, not a cost centre. They’re asking tougher questions: how do we make this channel profitable? How do we differentiate? How do we scale without compromising service?
A turning point came in April, when Walmart announced its e-commerce business is now profitable. Online now accounts for 17% of its total net sales and is expected to drive 50% of topline growth over the next five years. This is the benchmark. The UK must follow suit. It’s a clear signal that profitability in online grocery is not only possible, it’s essential.
A harder-working online offer
Making online work harder means monetising digital shelf space, using data to drive smarter targeting, and building loyalty through value-added experiences. It also means rethinking fulfilment – automation, operational refinement and smarter last-mile solutions are no longer optional. They’re essential to delivering the speed and accuracy shoppers now expect.
While shoppers once turned to online for convenience, that motivation is evolving. Today’s online experience is more engaging, more personalised, and more relevant than ever before.
Retailers have raised the bar, and shoppers now expect more. They want seamless journeys, tailored offers, and frictionless fulfilment. This shift is redefining what ‘good’ looks like in grocery retail.
Quick commerce is a case in point. Once seen as a niche, it’s now a core part of the online offer. DoorDash’s acquisition of Deliveroo signals a new phase of consolidation and scale. Retailers without a credible quick commerce proposition risk losing relevance.
But speed alone won’t win. If shoppers can’t get what they want, when they want it, they’ll go elsewhere. Availability and reliability are non-negotiable, and shoppers are becoming less forgiving.
Unifying online & offline
Let’s be clear: how people shop online is fundamentally different from how they shop in-store. That’s why online must be treated as a distinct, critical channel. At the heart of this is data, enabling better shopper understanding and targeting. It plays to e-commerce’s strengths – relevance, convenience, and difference – and idemands a different mindset. The digital shelf is dynamic, data-rich, and increasingly competitive.
Those who drive discovery and conversion can unlock a big opportunity, with greater efficiency and reach in the digital space. But to truly unlock its value, businesses must embed data and AI into every part of their organisation, from forecasting and fulfilment to marketing and merchandising. This isn’t just a tech upgrade – it’s a cultural shift.
The future of grocery is unified commerce. Online and offline must work seamlessly together, powered by insight and innovation. Retailers and suppliers must rewire their operations around the shopper, not the channel. That means aligning teams, breaking down silos, and designing experiences that reflect how people shop.
The message is simple: online is changing the game. Don’t get left behind. The time to act is now.
Michaela Jay, insight manager at IGD
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