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2022 Digital Grocery Industry Trends and Forecasts

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U.S. digital grocery sales will grow another 20.5% this year, reaching $147.51 billion. Walmart Inc. is the #1 digital grocery retailer and will continue to lead, followed by Amazon and Kroger. Do you work in the e-commerce and retail industry? Get business insights on the latest technology innovations, market trends, and your competitors through data-driven research.

With digital grocery shoppers representing more than half of the U.S. population, marking a pivotal year in 2021, retailers are racing to respond: Amazon Fresh will open dozens of new physical stores across the country over the next few years. Super-fast grocery startups, promising deliveries in as little as 15 minutes, are outpacing substantial losses in an already competitive market and exploring new revenue streams. And major players such as Uber Eats and Gopuff are expanding their service grounds for grocery delivery.

Whether click and collect or delivery, digital grocery – orders placed through any online channel, from desktop and mobile to apps and voice assistants – is on track for sales to experience double-digit growth in the years to come. Between 2021 and 2025, US sales are expected to nearly double with over $121 billion entering the market.

While convenience amid omicron pushes, and remote working as a result, remains a key driver of digital grocery adoption, certain economic conditions may still hamper its market share. If inflation and supply chain shortages continue to drive up the price of groceries, consumers may be less willing to pay for some digital grocery services that add delivery and other fees. costs. Additional costs passed on to the consumer could become more common as continued labor shortages have resulted in shortages of delivery drivers and other fulfillment workers.

US digital grocery industry size and statistics

Digital grocery is growing faster than in-store grocery, making it a larger percentage of overall grocery sales over time. This year, digital will account for 11.2% of the $1.32 trillion in U.S. grocery sales, a share that lags behind digitally mature retail categories but is larger than absolute dollar figures due to the sheer size of the market. And, with its currently low user penetration, there is still significant room for growth.

2020 has been a boon for those buying groceries online for the first time, with a 42.6% increase in shoppers year over year (YoY). The pandemic thrust it into the mainstream, which is why the growth hasn’t been — and won’t be — as big in the years since. The annual growth of digital grocery consumers will be tempered going forward, to 4.1% in 2022, 2.8% in 2023 and 2.5% in 2024.

The majority of the online grocery shopping population are millennials, who place a high value on same-day delivery more than other generations and are much more receptive to emerging home delivery options and new technology features sale to detail. This age cohort is also likely to live in urban communities where an array of delivery services are vying for their attention with introductory offers.

Now that digital shoppers have significantly outpaced their share of grocery consumers, adoption will slow, even as sales increase, which means existing digital grocery shoppers will support the market with bigger budgets. In fact, in 2025, the average annual spend per digital grocery shopper will increase from $856.47 in 2021 to $1,524.84.

Retailers and third-party delivery companies will feel the pinch, seeing a greater percentage of grocery sales go online despite more lenient pandemic restrictions. Click and collect will be an important driver, serving as an entry point for merchants who have not yet invested in delivery services. Cost and last mile logistics make delivery difficult to scale, while click and collect is more cost effective and easier for traditional grocers with large physical footprints looking to expand into digital.

As brands race to capitalize on higher spend, customer retention will become a primary focus. As a result, giants like Amazon and Walmart will increase investment in their membership programs, adding to membership benefits and discount incentives.

The best digital grocery companies

Walmart Inc. (including Sam’s Club) overtook Amazon in 2019 as the leader in U.S. digital grocery sales, claiming 28.9% of the market last year. In addition to its massive footprint of more than 5,000 stores across the country, the retailer has announced plans to open micro-distribution centers to address a rapid shift to digital across all categories.

Amazon, which is the only digital native retailer in the top five, has a 23.8% market share in second place. With just over 500 Whole Foods locations and 18 Amazon Fresh locations, it is not as well positioned to meet the growing demand for click and collect, which may be why grocery sales growth will remain relatively stable until 2023.

Kroger is a distant third in grocery e-commerce sales, behind just over half of what Amazon generates. That won’t change much until 2023, when Kroger’s digital grocery sales will be just 53.13% of Amazon’s sales. Kroger was an early investor in the digital space, giving it a huge competitive advantage over other traditional grocers, and they continue to innovate with AI-powered fulfillment facilities .

Target and Albertsons are nearly tied for fourth place, both of which have seen significant growth during the pandemic. Both retailers, strong in their physical presence, are expected to outpace Walmart, Amazon and Kroger’s annual growth for 2022, albeit from a smaller base.

Third-party delivery services such as Instacart take advantage of the likes of these retailers and cannot be directly compared, but still hold a significant share of the market with 28.8% of digital grocery sales in 2021. Instacart’s stronghold in the space is expected to drop in the coming years (from 73.8% of food middlemen sales to 68.2% in 2023) as competition intensifies between restaurant delivery companies and retailers invest in their own delivery infrastructure.

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