- US digital grocery sales are expected to grow by 20.5%, reaching $147.51 Billion.
- Walmart Inc. is No. Walmart Inc. is the No. 1 digital grocery retailer and will continue to be, followed closely by Kroger and Amazon.
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More than half of digital grocery shoppers account for the majority US populationThe 2021 year is a historic year for retailers. Amazon Fresh will open numerous brick-and-mortar shops across the country in the coming years. Ultrafast grocery startups promising drop-offs within 15 minutes are overcoming substantial losses in a highly competitive market and looking for new revenue streams. Major players like Uber Eats or Gopuff are expanding their services. grocery delivery.
Whether through click and collect or delivery, digital grocery—orders made via any online channel, from desktop and mobile to apps and voice assistants—is on track for sales to see double-digit growth in the years to come. The US is expected to double its sales between 2021-2025 with an estimated $121 billion in new market entries.
While convenience is still a driving factor in digital grocery adoption due to omicron surges and remote work, some economic conditions could limit its market share. Inflation and supply-chain shortfalls will continue to drive up the cost of grocery products. This could make consumers less willing to pay more for services such as digital grocery that include delivery charges or other fees. As a result of the labor shortage, delivery drivers and other workers for fulfillment services are in short supply, it is possible that additional costs will be more common.
US digital grocery industry size & stats
Digital grocery is seeing a faster growth rate than in-store grocery. This makes it a greater percentage of total grocery sales. This year, digital will make up 11.2% of the $1.32 trillion in US grocery sales—a share that lags behind digitally mature retail categories, but is larger with respect to absolute dollar figures due to the sheer size of the market. And, with its currently low user penetration, there’s still significant room for growth.
The year 2020 saw a 42.6% increase in buyers who purchased groceries online for their first time. The pandemic propelled it into the mainstream, which is why growth wasn’t—and won’t be—as significant in the years following. Going forward, the annual growth of digital grocery customers will be moderated at 4.1%, 2.8%, and 2.5% respectively in 2022, 2023, 2023, 2023, 2024.
Most of the online grocery purchasers are females. MillennialsAccording to reports, these people place more importance on same-day delivery than other generations. They are also more open to new in-home delivery options and retail-tech innovations. These people are likely to be urban dwellers, where a variety of delivery services compete for their attention with introductory deals.
Now that digital shoppers have firmly overtaken in their share of grocery consumers, adoption will slow, even as sales rise—meaning existing digital grocery buyers will prop up the market with bigger budgets. The average digital grocery buyer will spend $1,524.84 annually in 2025, up from $856.47 per year in 2021.
It will affect both retailers and third-party delivery businesses. A greater percentage of grocery sales will shift online, despite tighter pandemic restrictions. Click and collect will become a key driver. This service will allow retailers to start investing in delivery services. Delivery is difficult due to logistics and costs. Click and collect, however, is more profitable for legacy grocers that have large brick-and mortar footprints and want to move into digital.
Brands will be racing to maximize higher spends so customer loyalty will be a key focus. Amazon and Walmart, giants in the retail industry, will increase their investments in membership programs. This will result in discounts and subscription benefits.
Top digital grocery-shopping companies
Walmart Inc. (including Sam’s Club) overtook Amazon in 2019 as the leader of US digital grocery sales, claiming 28.9% of the market last year. The retailer, which has over 5,000 stores in the US, announced plans to open microfillment centers to support the rapid shift to digital across all categories.
Amazon holds 23.8% market share in second place. It is the only digitally native retailer of the top five leaders. With just over 500 Whole Foods locations and 18 Amazon Fresh locations, it’s not as well positioned to meet the rising demand for click and collect, which may be why grocery sales growth will remain relatively flat through 2023.
Kroger comes in third. Groceries ecommerceAmazon generates just under half of Kroger’s total sales. This won’t change much through 2023, when Kroger’s digital grocery sales will only be 53.13% of Amazon’s sales. Kroger was a pioneer investor in digital grocery, giving it an advantage over other legacy grocers. And they continue to innovate using AI-powered fulfillment centers.
Albertsons and Target are almost tied for fourth place, both having seen significant growth since the pandemic. For 2022, both retailers are expected to experience greater YoY growth, even though they have a smaller base.
Instacart and third-party delivery companies like it can’t be directly compared. But they still make up a substantial chunk of the market, accounting for 28.8% in digital grocery sales in 2021. Instacart’s stronghold in the space is expected to fall in the coming years (from 73.8% of grocery intermediary sales to 68.2% in 2023) as competition heats up among restaurant delivery companies and as retailers invest in their own delivery infrastructure.
