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US Online Grocery Sales To Surge Over The Holiday Season

US Online Grocery Sales To Surge Over The Holiday Season
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Post lockdown, US consumer demand for online grocery shopping has remained very strong: As our most recent US CPG Sales Tracker showed, online food retail sales were up by 74.7% year over year in the four weeks ended October 4. That marked a deceleration from 82.8% in the prior four-week period, but it represented an outperformance versus other CPG categories (such as beauty and personal care) online, according to our analysis of IRI data.

For the final quarter, we estimate a 60+% year-over-year rise in online food sales; our estimate assumes that the recent trend of slowing growth continues. We estimate that online food sales will total approximately $14 billion in the final quarter.

Growth of over 60% would be roughly double the rate of increase seen in the 2019 holiday season, when food e-commerce sales increased by around 33%. And, strong final-quarter growth would take the total 2020 increase in online food sales to 75% or more.

Offline and online, we estimate that total food and beverage retail spending will climb by around 9.0–9.5% year over year in the holiday quarter. More working at home, less inclination or options to dine out and fewer social and corporate events will maintain the switch of dollars from food service to food retail in the final quarter. A rise in (likely smaller-scale) at-home entertaining in the holiday season could be a further support for growth. Total food and beverages retail spending was up 10% for the first eight months of 2020 and was up 9.8% in August, according to the US Bureau of Economic Analysis.

In this context, US grocery retailers should continue to find ways to ramp up online capacity, such as through partnerships with delivery providers or extending physical capacity for collection services such as curbside pickup.