Online grocery leading the charge as the fastest growing channel

IGD’s latest online retail trends report is now live, providing a comprehensive overview of the global online channel, examining its current state, future trajectory, and how it will evolve.

Online growth is outpacing all other channels

The online channel has experienced exceptional growth in recent years and is set to remain the fastest-growing retail channel globally through 2029, with a CAGR of 6.0%. This growth will add $164 bn in sales, bringing the channel’s total to $646 bn by 2029. It is also expected to gain the most market share of all modern grocery channels, increasing by 0.5% to reach 6.3%.

While Asia will lead in absolute sales growth, Australasia will see the fastest growth rate, and North America will remain a hub for innovation, with Walmart and Amazon continuing to dominate the channel. However, growth comes with profitability challenges. As online penetration deepens, grocery retailers are under pressure to manage rising operational costs and protect margins.

The way people shop online is different to how they shop in-store, so this is a critical channel to get right. Speed, ease, and convenience are more important than ever to shoppers, which is why online continues to grow rapidly. But with disposable incomes under pressure and the perceived higher costs associated with online, retailers must continue to deliver great value and service to maintain momentum.

Four key trends driving growth

To sustain growth and improve profitability, retailers and suppliers must focus on emerging revenue levers and offsetting operating costs through our four key trends.

Retail media: with digital retail media becoming increasingly saturated, retail media network owners are looking to differentiate and demonstrate brands are getting a good return on investment.

Quick commerce: quick commerce is becoming an essential offer for established online retailers and a route to entering online for less-established players.

Fulfilment: no single dominant fulfilment method is emerging, as retailers focus on maximising the returns they gain from their existing ecommerce fulfilment networks.

Added services: added services are becoming a key offering for online retailers, providing a route to deeper shopper engagement, loyalty, and differentiation.

There are varying levels of maturity in the online space and how businesses should respond to the above will differ depending on how advanced their ecommerce business is. This is brought to life through actionable implications in the report which highlight the initial steps needed to define the online strategy, and the next steps needed to evolve the online strategy in a profitable way, for both retailers and suppliers.

Online is critical to a unified commerce future

Our report also explores how important the online channel is in enabling a future of unified commerce – the seamless integration of digital and physical retail. It identifies the core capabilities that underpin this and benchmarks how leading global retailers are progressing. As the industry moves toward a more connected and shopper-centric model, businesses must begin laying the groundwork today to succeed tomorrow.

If you are a Retail Analysis subscriber and want to gain a comprehensive overview of the global online channel, please read the full report here.

Retail Analysis subscribers and registered users can read some of the highlights taken from our global online trends 2025 report in the summary version.

If you have any questions, please get in touch at [email protected].