Kantar: Online Sales Growth Will Lift Walmart, Kroger

Walmart and The Kroger Co. will see online revenues grow to more than 10% of their overall sales in the next five years as the virtual sales channel will quadruple the growth of offline sales over that period, according to a new forecast from Kantar.

The London-based consultancy’s Retail IQ study estimates global retail sales will grow by 4.8% to $6.7 trillion by 2025, including $1.6 trillion in online sales—overtaking supermarkets as the largest channel of global retail trade. Online sales are expected to top the $1 trillion mark this year on 15.7% growth—a pace that will gradually slow to a 6.8% clip in 2025. In North America, retail sales will grow by 3.9% to $2.9 trillion by 2025, with online accounting for 14% of sales.

Kroger, Walmart and The Home Depot are identified as three physical retailers that will surpass 10% of their sales total online in the next years. Walmart is projected to maintain its status as the single largest global retail over that period, although Amazon will “close the gap significantly,” Kantar said.

China’s JD.com will maintain status as the world’s fastest-growing retailer and will rank as the world’s third-largest in 2025, Kantar added. Aldi, in the meantime, is forecast to climb from the ninth-largest retailer to the sixth-largest retailer by 2025.

Retailers in Asia, Kantar predicted, will inspire global competitors to invest in “channel-less” offline to online offerings.

“As we progress into this new decade, omnichannel will fast become mainstream, with emerging markets setting the pace of change,” Malcolm Pinkerton, VP of Kantar Retail IQ, said in a statement. “Designing for missions and occasions, not channels and touch points, will define the winners. Recognizing ‘everywhere’ is now a sales and marketing opportunity and that being accessible at each one will be essential to unlocking growth.”

By channel of trade, supermarkets will see a global compound annual growth rate of 2.9% between 2020 and 2025, nearing $1.6 trillion in global sales by the end of the period, or a market just smaller than Kantar anticipates the entire online sales category would be by then. The channel’s growth pace will trail that of online retail (13.6%); discounters (5.2%); convenience (5%); club (4.9%); drug (4.6%); and apparel retailers (3.9%), but outpace growth of specialty stores (2.8%); hypermarkets (2.3%); mass retailers (2%); and department stores during the period, Kantar said.

“Retailer business models will come under intense pressure to transform, as the need for agility and innovation intensifies to accommodate consumer expectations,” said Derya Guvenc, principal analyst for Retail IQ. “To adapt, brands should drive for total value chain approach to category planning and assortment management for total customer growth. While efficiency and profitability are high on the agenda, enhancing sustainability credentials must be a near-term priority for brands if they’re to remain on consumers’ preference list.”