Grocery Doppio’s 2023 Year in Review report reveals insights about omnichannel shopping, AI in grocery, and the impact of inflation on digital grocery, along with predictions for what’s coming in 2024.
Incisiv and Wynshop revealed the findings from Grocery Doppio’s 2023 Digital Grocery: Year in Review report.
Grocery executives cited top-line revenue growth (77%) and profitability (67%) as critical digital challenges for 2024. But with 69% of all 2023 grocery sales digitally influenced in some way, omnichannel execution is at the forefront of grocers’ minds. 83% said “improving integration between store and digital systems” is their top digital priority in 2024. 59% of grocers believe they will perform better in 2024 than in 2023.
The report is based on data from 2.2 million shopper orders, plus polling responses from 40,133 grocery shoppers and 3,883 grocery executives between January 1, 2022, and November 30, 2023.
Grocery Doppio is an independent source of grocery insights and data designed to help grocers jumpstart, accelerate, and sustain digital growth. Incisiv is an industry insights firm that helps retailers and brands navigate digital disruption, and Wynshop is a provider of digital commerce and fulfillment solutions for local store-based retailers.
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Digital Grocery Challenges In 2023
- Overall grocery sales increased to $926B, but digital grocery sales declined from $128B in 2022 (14.4% of all grocery sales) to a projected $121B in 2023 (13.1% of all grocery sales).
- Grocers lost an estimated $19 billion in digital sales in 2023 due to “unavailable” or “unsubstituted” items and suffered a digital sales margin loss of $281 million in 2023. However, this represents an improvement compared to 2022, when they lost $23 billion and $298 million due to the same problems.
- Having returned to their pre-COVID trajectory, digital sales are back on track to reach 16% by 2026.
How the Digital Grocery Changed
- Third-party grocery partners continued to lose market share to grocers’ digital offerings, falling to just 15.2% in Q4 2023, compared to nearly 30% in Q1 2022.
- However, pickup remained shoppers’ preferred fulfillment method, holding steady at 52% from 2022 to 2023.
- Amidst rising inflation, shoppers had to spend 12% more in 2023 to maintain parity. This came at the cost of brand name selection and quantity of items.
AI Leads Grocers’ Digital Technology Strategy For 2024
- While grocers’ technology budgets will increase just 2.1% in 2024 overall, digital grocery will enjoy an 8-14% budget increase in 2024, compared with 2023, and AI will receive a 14-37% bump.
- 73% of grocery executives expect AI capabilities to be embedded in their technology by 2025.
- 71% of C-level/SVP/EVP grocery executives plan to track their organizations’ use of AI closely.
“Inflation put a dent in 2023 digital grocery sales,” said Gaurav Pant, Chief Insights Officer of both Incisiv and Grocery Doppio. “As customers modified their shopping strategies to battle rising costs, they did more in-store purchasing. However, grocers’ technology investments for 2024 demonstrate confidence that the long-term trend for digital grocery is still up and to the right.”
“Inventory control, omnichannel shopping, and effective implementation of AI are key to achieving profitability in digital grocery,” added Charlie Kaplan, Chief Revenue Officer at Wynshop. “Grocers need the technological ability to accurately measure shopper behavior and unlock value multipliers across shopping channels.”