The Future of Grocery: Sustaining Digital Momentum and Profitability Post-COVID

The grocery sector has undergone a seismic transformation since the onset of COVID-19. What began as a rapid, necessity-driven shift to digital channels has now become a permanent fixture of the grocery landscape. As the world moves beyond the immediate crisis, grocers face a new imperative: how to sustain the digital momentum gained during the pandemic, address the persistent profitability challenges of online channels, and continue to innovate in fulfillment, supply chain, and customer experience.

The Digital Acceleration: A New Baseline for Grocery

During the height of the pandemic, online grocery sales surged—jumping from 7% to over 10% of total business in many markets, with some grocers experiencing digital growth that outpaced the previous three years combined. This rapid adoption compressed years of digital transformation into mere months. Grocers responded by scaling online ordering, expanding delivery and click-and-collect services, and investing in contactless payment and curbside pickup. For many, this meant hiring tens of thousands of workers and repurposing physical stores as dark stores or micro-fulfillment centers to meet soaring demand.

Yet, as restrictions ease and in-store shopping resumes, the digital share of grocery remains elevated. Consumers have grown accustomed to the convenience, safety, and flexibility of online channels. The challenge now is to make these digital gains sustainable and profitable.

Profitability in Online Grocery: Turning Challenge into Opportunity

Despite the growth in digital sales, profitability in online grocery remains elusive. High fulfillment costs, last-mile delivery expenses, and increased returns have put pressure on margins. Grocers must now shift from emergency operational fixes to building resilient, scalable digital infrastructure. Key strategies include:

Incentivizing Click-and-Collect: Encouraging customers to use click-and-collect over home delivery can lower last-mile costs and bridge the gap between digital and physical channels.
Flexible Fulfillment Models: Partnering with third-party delivery providers and leveraging dark stores or hybrid store formats can expand picking capacity and optimize investment.
AI-Driven Demand and Inventory Management: Advanced analytics and machine learning enable grocers to forecast demand spikes, optimize inventory, and reduce costly stockouts or overstock situations.
Returns Optimization: Implementing smarter returns management—such as encouraging in-store drop-offs or allowing customers to keep low-value items—can help control costs and improve customer satisfaction.

Innovating in Fulfillment and Supply Chain

The pandemic exposed vulnerabilities in global food supply chains, highlighting the need for greater agility, transparency, and resilience. Grocers are now reimagining their supply chains with a focus on:

Cloud-Based, Scalable Infrastructure: Moving operations to the cloud enables rapid scaling and resilience against demand surges. AI-powered demand planning tools can capture intent signals across channels, anticipating the need for additional resources in real time.
Virtual Hub-and-Spoke Networks: Redistributing inventory through virtual networks allows for efficient delivery of in-demand items and greater flexibility in response to disruptions.
Digitally Connected Supply Chains: Integrating data across the supply chain—from suppliers to stores to last-mile partners—provides end-to-end visibility and enables rapid response to market changes.
Automation and Robotics: Investing in automation for picking, packing, and fulfillment reduces labor costs and increases efficiency, particularly in dark stores and micro-fulfillment centers.

Elevating the Customer Experience

As digital and physical channels converge, customer expectations have evolved. Grocers must deliver seamless, personalized experiences across every touchpoint:

Contactless and Mobile-First Experiences: Scan-and-go technology, mobile checkout, and contactless payment are now table stakes for in-store convenience and safety.
Personalization Through Data: Customer Data Platforms (CDPs) unify shopper data, enabling targeted offers, personalized recommendations, and loyalty programs that drive retention.
Omnichannel Integration: Unified commerce platforms ensure consistent experiences, whether customers are shopping online, in-store, or via curbside pickup.
Transparent Communication: Proactive messaging about product availability, delivery slots, and safety measures builds trust and confidence, especially for vulnerable populations.

Real-World Success: Scaling Digital Operations and Building Resilience

Publicis Sapient has partnered with leading grocers worldwide to deliver rapid, scalable digital transformation. For example, a major UK-based grocer doubled its online order capacity in less than a week at the height of the pandemic, accommodating nearly 1 million online requests and 1.2 million delivery slots. In North America, Walmart Canada’s Fast Lane program integrated scan-and-go technology, enabling frictionless checkout and reducing in-store congestion. Across APAC, retailers have leveraged super-apps and mobile-first strategies to meet consumer demand for hyperlocal delivery, while AI-driven demand planning tools enabled rapid response to shifting needs.

Best Practices for Sustaining Digital Momentum

Invest in Flexible, Cloud-Based Infrastructure: Enable rapid scaling and resilience to demand surges.
Leverage AI and Machine Learning: Optimize inventory, forecast demand, and personalize the customer journey.
Modernize Supply Chains: Break down silos, integrate data, and automate wherever possible.
Prioritize Omnichannel Fulfillment: Seamlessly connect digital and physical touchpoints, from click-and-collect to home delivery.
Focus on Customer-Centric Innovation: Use data to anticipate needs, personalize experiences, and build lasting loyalty.

The Path Forward

The future of grocery is defined by agility, innovation, and a relentless focus on the customer. Grocers who sustain their digital momentum, address profitability head-on, and invest in resilient, technology-enabled operations will not only weather future disruptions—they will lead the next era of grocery retail. Publicis Sapient stands ready to help grocers unlock new sources of value, build lasting customer relationships, and achieve sustainable growth in a rapidly evolving landscape.

Ready to shape the future of grocery? Connect with Publicis Sapient to turn insights into action and lead your business into a new era of digital excellence.