Online grocery now accounts for 7.2% market share

Supermarkets are seeing their share of sales shrink due to the strong emergence of e-commerce in FMCGs. In Europe, growth is slower: Asia leads the way with innovative concepts. What will be the impact of the current crisis?

Supermarket under pressure

While the total FMCG market grew by 2.1% in 2021, online grocery sales grew by 15.8%. This growth is a little less spectacular than in the year of confinement 2020, when food e-commerce grew by 45.9%, but it still means that e-commerce has increased its market share: in Worldwide, 7.2% of shopping is now done online, up from 6.3% in 2020 and 4.8% in 2019. In Europe, the online share is 6.9%.

The logical consequence is that the market share of supermarkets and hypermarkets in the total food market is under pressure: it has fallen from 52.4% in 2020 to 51.4% in 2021. Physical stores remain by far the dominant channel for food sales, but their share is declining year on year. The numbers come from a new report by Kantar, titled “Winning Omnichannel.”

New business models

The engine of e-commerce growth is – unsurprisingly – in Asia, where the online share of FMCG is already 15.3%. 44.2% of Asians shop online. In mainland China this is already the case for 88.8% of households, in South Korea it is 87.1%. New business models are popular: live streaming, group purchases, online-to-offline, etc.

Penetration in Europe is much lower at 35.2% and seems to be stagnating. Older buyers in particular, who were forced to go online in 2020, are giving up again. Europeans are also slower to adopt new models such as fast trading or social trading. Express delivery services, for example, are mainly used for ordering meals, not (yet) for groceries. In France, Drive retains an online share of 32%.

Growth slowdown

Kantar finds that consumers around the world are shopping online more frequently: the average number of online orders has increased from 8.7 in 2020 to 10.4 in 2021. This growth will continue. Online will therefore continue to grow faster than other food chains in the coming years and will gain around 0.5% market share every year. This means that by the end of this year, the share of online purchases will be 7.7%, and within four years it will be over 9%. Hypermarkets and supermarkets continue to lose share, but at a slightly slower pace than in recent years. By the end of 2025, they will still have a share of just over 50%.

The big question mark is how online and offline shoppers will react to the current crisis. Kantar expects a general slowdown: the total FMCG market would grow by 1.3% this year. The share of promotions will increase further. Part of the growth of e-commerce will have to come from innovation. In this regard, the West can learn a lot from what is happening in Asia.