IGD: online shines as fastest growing grocery channel but profitability challenges continue

Online is set to remain the fastest growing grocery channel globally through 2029. IGD’s latest Online Retail Trends Report reveals that this growth will add $164 billion in sales, bringing the channel’s total to $646 billion 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, this growth comes with profitability challenges. As online penetration deepens, grocery retailers are under pressure to manage rising operational costs and protect margins.

Michaela Jay, Insight Manager at IGD, comments: “The way people shop online is different to how they shop in-store, so this is a critical channel to get right. 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 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. 

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.

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 that businesses must begin laying the groundwork today, aligning internal operations with evolving customer expectations to stay competitive tomorrow.

2025 RTIH INNOVATION AWARDS

Grocery retail will be a key focus area at the 2025 RTIH Innovation Awards.

The awards, which are now open for entries, celebrate global tech innovation in a fast moving omnichannel world.

Our 2024 hall of fame entrants were revealed during an event which took place at RIBA’s 66 Portland Place HQ in Central London on 21st November, and consisted of a drinks reception, three course meal, and awards ceremony presided over by comedian Lucy Porter.

In his welcome speech, Scott Thompson, Founder and Editor, RTIH, said: “The event is now into its sixth year and what a journey it has been. The awards started life as an online only affair during the Covid outbreak, before launching as a small scale in real life event and growing year on year to the point where we’re now selling out this fine, historic venue.”

He added: “Congratulations to all of our finalists. Many submissions did not make it through to the final stage, and getting to this point is no mean feat. Checkout-free stores, automated supply chains, immersive experiences, on-demand delivery, next generation loyalty offerings, inclusive retail, green technology. We’ve got all the cool stuff covered this evening.”

“But just importantly we’ve got lots of great examples of companies taking innovative tech and making it usable in everyday operations - resulting in more efficiency and profitability in all areas.”

Congratulations to our 2024 winners, and a big thank you to our sponsors, judging panel, the legend that is Lucy Porter, and all those who attended November's gathering. 

For further information on the 2025 RTIH Innovation Awards, please fill in the below form and we will get back to you asap.