Revenue fell during the recession, but declines were mitigated by increased internet connectivity
Los Angeles, CA (PRWEB) October 04, 2012
Americans' internet affinity has driven the Online Grocery Sales industry for much of the past decade, and while revenue fell during the recession, performance has not been severely marred over the past five years. “Broadband connections have increased at 16.4% per year on average over the five years since 2007,” says IBISWorld industry analyst Nikoleta Panteva. “Meanwhile, the number of mobile internet connections has grown at an average annual rate of 59.9%, underpinning demand for online retailing services.” As a result, industry revenue has grown at an average annual rate of 1.2% to $6.0 billion. Despite weak performance during the recession, IBISWorld expects an 8.3% jump in 2012 alone, exemplifying consumers' tastes for online grocery shopping.
In 2008 and 2009, the Online Grocery Sales industry suffered revenue declines of 2.6% and 4.1%, respectively. During these years, per capita disposable income weakened and shoppers opted for lower-priced items. Some even shied away from internet grocery shopping to avoid delivery charges. Industry profit (i.e. earnings before interest and tax) also declined as a result, bottoming out in 2009. On the back of improving incomes and rising food prices, industry profit has grown in 2012. External competition from traditional brick-and-mortar grocery stores remains a threat, however. “Operators compete on price, product selection, time savings and customer service,” adds Panteva. “If online grocers do not price their products competitively or offer products not easily found in physical supermarkets, they risk losing business to traditional stores.” The industry has a low level of concentration and is highly fragmented. Many online grocery retailers are small- to medium-size private establishments that operate on a state and regional level and serve niche markets. Although these retailers offer similar products and services, low industry concentration stems partly from the diversity of regions covered by industry operators, including major player Peapod.
The five years to 2017 promise strong growth for the Online Grocery Sales industry. Driven by declining unemployment and increased internet usage, industry revenue is forecast to grow in 2017. Falling unemployment will decrease consumers' free time, making internet food shopping more attractive. Moreover, as people return to work, their incomes will grow, further stimulating industry demand. Input price increases will also be easier to pass on to consumers, allowing for profit growth in the five years to 2017. For more information, visit IBISWorld’s Online Grocery Sales in the US industry report page.
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IBISWorld industry Report Key Topics
This industry sells groceries via online channels. The industry includes companies that are based online as well as those that have a physical presence and also sell food on the internet.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.