Supermarkets of the future: Third of physical store space to be ‘dedicated to online fulfilment’

Ecommerce sales are set to reach almost 35% (34.8%) share of global chain retail by 2023, leading to changes in the way stores fulfil orders, according to new research.

New data from Edge Retail Insight, the market research arm of Edge by Ascential, shows that the share of in-store sales will decline to 62.4% by 2025, down from about 70% in 2021.

As online sales accelerate, the store of the future must become a strategic resource, enabling retailers to get closer to consumers and reduce the costly ‘last mile’, as well as maximise online capacity and efficiency.

This is one of the recommendations for retailers in Edge Retail Insight’s Winning Strategies: Store of the Future 2021 report, the third edition of the report that focuses on store-based retail, how physical retail must change to meet new customer demands and how suppliers can successfully execute in a new and more complex operating environment.

With same-day delivery now a table-stakes offering, the report suggests that retailers use their physical assets as delivery intermediary fulfilment centres – as Waitrose and Sainsbury’s have been trialling with Deliveroo in the UK and Asda with Uber Eats – autonomous vehicle hubs, ultra-rapid delivery spokes and click-and-collect hubs to offer greater convenience and proximity to customers.

The reallocation of store space to accommodate new shopping habits could mean that up to one third of store space could be resourced to fulfil online orders in major channels and larger store formats as ecommerce share of global chain retail sales grows – reaching 34.8% by 2023 and almost 40% by 2025. Ecommerce growth jumped two years ahead of Edge Retail Insight projections made prior to the COVID-19 pandemic.

The report’s authors warn that the traditional store-based economic model is now under threat from the shifting consumer landscape and emerging technologies that are transforming discovery, selection, and purchase.

Deren Baker, CEO at Edge by Ascential, said: “The global pandemic accelerated the adoption of online retail across all key categories. With record numbers of store closures since the outbreak of the pandemic, store-based retail is now at a tipping point. However, a lot of value remains in the bricks-and-mortar model – you just need to look at Alibaba and Amazon’s investment into the high street as evidence of that.

“But retailers and suppliers must invest in a range of new capabilities to drive successful actions in the future store, which will have very different characteristics to the model that worked until about 2010.”

The Winning Strategies: Store of the Future 2021 report says retailers have no choice but to adapt their store formats to remain relevant in the post-pandemic retail landscape. It shows that from 2021 through to 2026, the share of online sales in major markets is set to grow rapidly – up to 70%, which is 10 basis points higher than today.

Source: Net Imperative