Incisiv, a next-generation industry insights firm that helps retailers and brands navigate digital disruption, and Wynshop, a provider of digital commerce and fulfillment solutions for local store-based retailers, revealed the findings from their State of Digital Grocery Performance Card: Q3 2023.

According to the latest Grocery Doppio report, grocers are taking care with the amount they spend on technology, selecting specific areas which they appear to believe are the most important to focus on. Seventy-one percent of grocers declined to increase their overall technology budgets in 2024. However, 83% will increase spending on digital technologies in 2024, 79% will experiment with AI use cases, and 67% will increase their spending on security-related technologies.

The Q3 2023 Scorecard is based on shopping data from 2 million shopper orders plus polling responses from 36,910 grocery shoppers and 3,504 grocery industry executives.

More key findings from the State of Digital Grocery Performance Card: Q3 2023 Performance Card include:

• Labor, inventory, and fulfillment lead grocers digital spending increases
  — Grocers will spend 7.9% more on digital in 2024 than they did in 2023.
  — Within that increase, they intend to spend the most on labor optimization (11.2%), inventory optimization (9.6%), picking optimization (8.1%), and digital offers/loyalty (7.3%).
  
• Digital sales up slightly, but digital’s share of market dropped and third-party app share hit an all-time low
  — Total grocery sales in Q3, 2023 came in at $236 billion, up slightly from $226 billion in Q2, 2023
  — Digital grocery sales rose to $30.4 billion in Q3, up from $29.5 billion in Q2, but that represented just 12.9% of overall grocery sales—the first time that digital’s share of market fell below 13% this year.
  — Third party apps suffered the most, losing 4.1% of digital market share in Q3, falling to just 15.9% in Q3, as compared to 26.6% when Grocery Doppio analyzed this metric in Q3, 2022.
  
• Digital basket sizes increased, even as items/basket fell
  — Digital basket sizes grew by 12% in Q3, 2023, even as the average items/basket fell by 2-3 items.
  — Basket sizes for large grocers were 4x that of small grocers. 

“Digital grocery sales do appear to have reached a plateau, but digital still influences most grocery sales,” said Gaurav Pant, Chief Insights Officer of both Incisiv and Grocery Doppio. “Along with this indicator of relative market maturity, we are seeing grocers become more focused on where they are spending on technology. Investment in digital channels and security are both increasing, while AI is clearly seen as an important area of future growth as well.”

“You can read grocers’ digital pain points between the lines of their 2024 budgets,” said Charlie Kaplan, Chief Revenue Officer of Wynshop. “They need technology tools to optimize labor amidst rising costs, better inventory management as supply chain disruptions persist, tools for operational efficiency in fulfillment, and ways to lean into digital incentives and loyalty.”

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