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Wednesday, July 18, 2018

Grocers Partner for Digital Growth

Some interesting data on the value of digital in grocery.  In particular big investments in leading edge technologies.    Also the relatively rare use of the term ROI as welll.

Grocers Partner For Digital Growth
Ananda Chakravarty,  Senior Analyst

Grocers Are Partnering For Digital Growth
The last few months have been a watershed of new deals around grocery fulfillment.  Walmart is partnering with DoorDash, Kroger is investing in Ocado, Target is acquiring Shipt, and Amazon is delivering groceries to consumer vehicles.  Fulfillment has become the key parameter for grocers to grow their digital business.  Why?  Digital grocery is still small, and grocers are unable to justify fulfillment costs.  Digital grocery is growing at a CAGR of 17% globally but remains less than 3% of the US retail grocery market.[1]  The lack of comparable ROI data in the small digital grocery market has made it difficult for grocers to make the case to invest in digital expansion, especially since grocers expect rapid payback on investments. With the exception of large grocers like Walmart or Kroger, most grocers have little ability to invest in broad scale digital initiatives given average net margins for retail grocery of 1.62%.[2]  Tiny margins, combined with delivery costs and cold chain requirements for perishables, make profitable eCommerce solutions for grocers very difficult. To make eCommerce investments economical, grocers are:  ... "

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