Digital grocery buyers accounted for more than half of the US population last year, and retailers have rushed to respond: Amazon Fresh will open dozens of new brick-and-mortar stores across the country over the next few years. Ultrafast grocery startups, promising drop-offs in as short as 15 minutes, are pushing past substantial losses in an already competitive marketplace and exploring new revenue streams. Major players such as Uber Eats and Gopuff are expanding their service for 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.

Although convenience amid surges of omicron, and remote work as a result, remains a key driver in digital grocery adoption, certain economic conditions may still hinder its share of the market. If inflation and supply-chain shortages continue to drive up the price of grocery products, consumers may be less inclined to pay for certain digital grocery services that add delivery charges and other fees. Additional costs passed onto the consumer could become more common, as the ongoing labour shortage has put delivery drivers and other fulfilment service workers in short supply.

US digital grocery industry size & stats 

Digital grocery is growing faster than in-store grocery, making it a larger percentage of overall grocery sales over time. 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 concerning 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. 

2020 was a boon for those purchasing groceries online for the first time, with a 42.6% increase in buyers year-over-year (YoY). The pandemic propelled it into the mainstream, which is why growth wasn’t—and won’t be—as significant in the years following. Annual growth of digital grocery consumers will be tempered going forward, at 4.1% in 2022, 2.8% in 2023, and 2.5% in 2024. 

The majority of the online grocery buyer population are millennials, who reportedly place a higher value on same-day delivery than other generations and are far more receptive to emerging in-home delivery options and new retail-tech features. 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.

Digital grocery shopping trends 

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, in 2025, the average annual spend per digital grocery buyer will increase from $856.47 in 2021 to $1,524.84.

Both retailers and third-party delivery companies will feel its effect, seeing a larger percentage of grocery sales shift online. Click and collect will be a significant driver, serving as an entry point for retailers that have not yet invested in delivery services. Cost and last-mile logistics make delivery difficult to scale, whereas click-and-collect is more profitable and an easier move for legacy grocers with large brick-and-mortar footprints who want to expand into digital.

With brands racing to take advantage of higher spending, customer loyalty will become a main focus. Giants like Amazon and Walmart will dial up investments in their membership programs as a result, adding to subscription benefits and discount incentives.

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. In addition to its massive retail footprint of more than 5,000 stores across the country, the retailer has announced plans to open micro-fulfilment centres to keep up with a meteoric shift to digital across all categories.

Capturing 23.8% of the market share in second place is Amazon, which 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 a distant third in grocery ecommerce sales, trailing just over half of what Amazon is generating. This won’t change much through this year when Kroger’s digital grocery sales will only be 53.13% of Amazon’s sales. Kroger was an early investor in the digital space, giving it a huge competitive edge over other legacy grocers, and they are continuing to innovate through AI-powered fulfilment facilities. 

Target and Albertsons are nearly tied for the fourth spot, both of which have seen significant growth over the pandemic. Both retailers, strong in their physical presence, are forecasted to see greater YoY growth than Walmart, Amazon and Kroger for 2022, albeit from a smaller base. 

Third-party delivery services such as Instacart profit off the likes of these retailers and cannot be directly compared, but still take up a significant chunk of the market with 28.8% of 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 delivery infrastructure.

Predictive personalisation comes of age

But by far the greatest impact on online grocery sales has been the appreciation and adoption of predictive personalisation. This now means consumers of early adopters get to receive details of the products that most interest them, at that exact moment. Retailers still maintain their preference for traditional ESP promotion and offer, segmentation solutions, requiring heavy staffing overheads, and lag. While many retailers are still hung up assuming that personalisation is the same thing as offered them by their email service provider, or others merely the arrangement of products once that consumer visits their site, PPS is delivering much greater returns, as the go-get approach delivers phenomenal yield.

All the leading research institutes, including McKinsey, Forrester, Gartner, Statista and Bain, identify that predictive personalisation software delivers 20x the ROI of all the above methods combined. PPS uses buying habits and navigation history when offering individual consumer products, calculated to be most likely to be purchased next.