The Modern Milkman

The grocery market is facing a major shift, an exciting shift. All industries are going through major changes, in recent decades it has been about adapting business models to a digital and more sustainable landscape. Large industries in and within banking and finance, travel, transport, communication, retail have had to change their business models in order to continue to exist. Several large companies have not believed or chosen not to follow the development and have therefore ceased to exist. The ability to anticipate and adapt to changes in the market is crucial.

We are (again) seeing a major transformation in the grocery industry, a traditional industry where the digital transition has been delayed. This is for several reasons.

1. A geographical and logistics challenge
2. Challenging customer offering and journey
3. The importance of constant and high availability

Already in the early 2000s, we began to see strong global growth and demand for digital adaptation also in the grocery industry (E-grocery). This culminated with the pandemic and post-pandemic, we have seen a stagnation but a continued higher level of demand for e-grocery than before the pandemic. In US 11,2% of Grocery sales are online, in other words over 1 of 10$ is bought online. Which is the highest number ever. In the Nordics the numbers are lower, but expects to continue to grow significant. Just in Sweden E-grocery stands for about 2 billion euros.

But big changes in the industry has already happened if we look back. The number of local stores has decreased a lot. A shift took place from smaller stores to larger shopping centers and larger stores.

In the past until the 80s the store network and physical store where still in focus, a heritages from the Milkman and smaller stores on the countryside where the Groceries were delivered to the households from the local store, this time´s E-grocery.

In the 2000´s there was a shift to large stores and shopping centers, today the store experience is a and o, with more of a shopping center then a Grocery store.

In the 2010´s E-grocery shifted focus to large warehouses outside big city´s – here we today see a pivot whereas these models more shift to be a technical provider.

During the Pandemic the MFC´s (multi fulfillment center) in central areas where a popular phenomenon.

Present we see a lot of questions being asked when it comes to E-grocery

Analysts believe that the share of E-grocery will grow to 15-18% by 2030 in developed countries. Important for the development of e-grocery:

– Profitability

– Sustainability for the economic and operating model

– Innovation & technology

– High quality and local attendance

The modern Milkman is back and check the above boxes

Globally we see local E-grocery with companies like Shipt, Cornershop and Instacart that have been operating for over 10 years, nowadays the focus is on profitable local E-grocery and helping local stores going digital. In the Nordics we at Picsmart are proud to continue our journey as The Nordic Modern Milkman.

Source reference:

https://www.oberlo.com/statistics/online-grocery-penetration-us

https://www.winsightgrocerybusiness.com/technology/online-sales-near-14-us-grocery-market-next-five-years

https://www.mckinsey.com/industries/retail/our-insights/the-next-s-curve-of-growth-online-grocery-to-2030

https://www.mckinsey.com/industries/retail/our-insights/state-of-grocery-europe-2023-living-with-and-responding-to-uncertainty

https://www.mckinsey.com/~/media/McKinsey/Industries/Retail/Our%20Insights/The%20future%20of%20online%20grocery%20in%20Europe/The_future_of_online_grocery.ashx

https://www.globenewswire.com/en/news-release/2022/06/13/2461011/28124/en/Global-Online-Grocery-Market-2022-to-2030-Size-Share-Trends-Analysis-Report.html

https://www.wsj.com/articles/supermarkets-competition-costco-walmart-aldi-4f3c0d0c

https://www.ica-historien.se/tema/butikerna/