The growth of egrocery sales is expected to slow down in the years after the pandemic, according to a new forecast.
Key findings from a new report from Brick Meets Click and Mercatus:
- U.S. egrocery sales are projected to post a compound annual growth rate of 11.7% over the next five years.
- Egrocery share of overall sales will rise from 11.2% in 2022 to 13.6% in 2027.
- Inflation is expected to grow at a five-year CAGR of 4.8%.
What’s the takeaway? Egrocery sales are still expected to grow faster than overall grocery retail, which will have a five-year CAGR of 2.5%. However, the growth will slow down from the rapid expansion during the pandemic years.
What’s driving the growth? Alongside inflation, factors in the growth include concerns about illnesses such as COVID, RSV, and the flu, as well as increased online adoption.
Key quote from Brick Meets Click Partner David Bishop: “Now more than ever, grocers need a grounded view of the future market while simultaneously strengthening the customer experience to protect their base business and improving the profitability of this higher cost-to-serve mode of shopping.”
US grocery sales (Via Brick Meets Click)
More findings:
Rise of pickup: Grocery pickup is expected to grow 13.6%, compared to 10.8% for delivery and 8% for ship-to-home. With this, pickup will rise to a share of 45.4% in 2022 to 50.3% during 2027. This is due to a pair of interlocking trends: Many grocers are still expanding pickup capabilities. Meanwhile, delivery is growing saturated, as customers have a choice from many different options.
Average order values are expected to grow between 4.2% and 6.4%, inclusive of inflation.
Order frequency is expected to increase from 1.9% to 3.3%.
The bottom line: Egrocery remains a sticky category from the pandemic years. Yet the data indicates that it will return to being a slow buildup rather than the fast rise that occurred in recent years. Expect grocers to get more serious about the profitability of their egrocery programs. After getting capabilities up and running over the last two years, they will want to ensure that these programs make business sense.“When it comes to achieving online channel profitability, my advice to grocery retailers is to work smarter, not harder, and focus on the fundamentals,” said Sylvain Perrier, president and CEO, Mercatus. “Know who your customers are and the value you provide them. Use that insight to deliver a more personalized brand experience that is consistent and frictionless. Take steps to improve margins using simple tactics like offering lower cost Pickup services, engaging with multiple third-party delivery providers, and leveraging first-party retail media to offset the cost to serve online customers.”
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Now, one company will have North American cereals like Frosted Flakes, Froot Loops and Rice Krispies under the WK Kellogg Co banner.
Another will have snacks like Pringles, North American frozen foods such as Eggo and plant-based brands like MorningStar Farms.
This week, Kellogg announced that the snacks business has a new name: Kellanova.
Here are the strategies that Kellogg employed that led to this name:
- Ask the employees: Kellogg Company asked employees for input on the name, and received 4,000 suggestions from 1,000 employees.
- Listen to the results: 20% of the employees suggested a variation of the W.K. Kellogg name, while other employees suggested that the name include "nova."
- Go to the root: "Nova" comes from the Latin word for new. CEO Steve Cahillane said it "signals our ambition to continuously evolve as an innovative, next generation, global snacking powerhouse."
As The Wall Street Journal reports, this is just the latest new company name to take a Latin root in recent years, as Kellanova joins GE Vernova, Mondelez and Altria. It's also among a number of spinouts being completed by corporations, joining GSK spinoff Haleon, J&J's Kenvue and a forthcoming company that will spin out of 3M.
Even with a name that emphasizes moving forward, Kellanova is keeping one element that is familiar: The logo still has the iconic cursive K. It will even get the boldly simple stock ticker symbol "K" to go along with it.
(Courtesy photo)
Even the WK Kellogg Co is combining the past and future. The company is seeking to position itself as a "117-year-old startup," even as it draws on the name and signature of the Kellogg's founder. There's even a more subtle hint about an unwritten chapter: The "Co" doesn't have a period.
(Courtesy photo)
To get to the future, you need to bring along a bit of the past.
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