- US digital grocery sales are expected to grow by 20.5%, reaching $147.51 Billion.
- Walmart Inc. is the number one retailer in digital grocery. 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. Uber Eats, Gopuff and other major players are expanding their service areas. 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. US sales will nearly double between 2021 and 2025 as more than $121 million is coming into the market.
Although 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 fees and other fees. Due to the continuing shortage of labor, additional costs could be passed on to the consumer.
US digital grocery industry size & stats
Digital grocery is growing faster that in-store grocery. It makes up a larger portion of overall 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, 2024, and 2024.
The vast majority of online grocery shoppers are 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. In fact, digital grocery buyers will spend $1,524.84 more annually in 2025 than they did in 2021, an increase of $856.47.
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 can be costly and difficult to scale. However, click and collect is more lucrative and easier for legacy grocers who have large brick and mortar locations and are looking to expand into digital.
As brands race to capitalize on higher spending, customer loyalty will be a major focus. Amazon and Walmart will invest more in their membership programs, offering discounts incentives 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. To keep up with the rapid shift from traditional to digital, Walmart Inc. has opened micro-fulfillment centres to expand its retail presence of over 5,000 stores.
Amazon is second in market share with 23.8%. This is because it is the only digitally-native retailer among 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 is third from the bottom. Groceries ecommerceKroger’s sales are just half as big as Amazon’s. This won’t change much through 2023, when Kroger’s digital grocery sales will only be 53.13% of Amazon’s sales. Kroger was an early investor into the digital space, giving them a significant competitive advantage over legacy grocers. They are also continuing to innovate with AI-powered fulfillment facilities.
Albertsons and Target share fourth place. Both of these retailers have experienced significant growth during the pandemic. For 2022, both retailers are expected to experience greater YoY growth, even though they have a smaller base.
Instacart, a third-party delivery service that makes a profit from the likes and comparisons cannot be made. However, they still hold a large share of the market accounting for 28.8% of all digital grocery sales by 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.
