As grocery shopping enters a new era of digital transformation, FMI—The Food Industry Association and NielsenIQ released their new report, Digital Engagement Transforms Grocery Shopping, which premiered at FMI’s Midwinter Executive Conference. The report finds that today, more than 90% of shoppers participate in both online and in-store shopping.

In 2017, FMI and NIQ predicted that by 2025, digitally engaged grocery shopper spending would reach $100 billion or 20% market penetration. This year’s report reveals that those projections were met and exceeded, with the latest FMI/NIQ projecting total U.S. online sales for grocery items to reach $388 billion or nearly 25% market penetration by 2027. It underscores the growing influence of digital tools—from e-commerce platforms and retailer apps to social media and AI-powered personalization—on the modern-day grocery shopping experience and illustrates how the COVID-19 pandemic contributed to the rapid adoption of omnichannel shopping.

“Consumers are seamlessly blending in-store and online experiences to meet their needs,” said Mark Baum, chief collaboration officer and senior vice president of industry relations for FMI. “Our research underscores the urgency for food retailers and manufacturers to adapt to this omnichannel reality and leverage digital technologies to enhance convenience, personalization and trust. Trading partners need to meet consumers where and how they want to be met.”

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“Digital engagement is no longer a complementary strategy, it’s essential to growth,” said Kim Cox, managing director, omnicommerce at NielsenIQ “With online food sales projected to reach $388 billion by 2027, retailers and manufacturers must prioritize e-commerce and social commerce strategies to meet the expectations of digitally connected consumers.”

Other key findings of the report include:

• Online sales growth: Online sales growth exceeds that of in-store for food and nonfood categories, while in-store leads in total share.
• Youth purchasing power: Gen-Z begins its shopping journeys online and is heavily influenced by social media. Meanwhile, millennials index highest for online purchasing.
• Social media e-commerce: 55% of respondents now make direct purchases from social media or live-stream platforms for grocery and household items.
• Technology prioritization: 92% of retailers are using technology, including AI, to personalize or customize shopping or marketing experiences, both online and in-store.
• Curbside pickup: Curbside pickup is used more often by shoppers at 31% of respondents, overtaking same-day home delivery, which has dropped to 29%.

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The findings highlight both the challenges and opportunities facing food retailers and manufacturers to prioritize their connected commerce strategies. Embracing channel fluidity, which allows shoppers to move effortlessly between e-commerce, in-store and social channels, is essential for future success.

The Digital Engagement Transforms Grocery Shopping study is part of a strategic alliance and multi-year initiative with FMI and NIQ to uncover comprehensive insights on current and future digital shopping behaviors within the food retail marketplace.