Mass Retailers Gain Market Share as Delivery Sales Soar 25% Year-Over-Year, While Supermarkets Struggle to Keep Up

The U.S. online grocery market showed remarkable growth in the third quarter of 2024, with total sales reaching $27.4 billion, marking a 13.8% increase compared to the same period in 2023. This surge was primarily fueled by a strong recovery in delivery services, which saw year-over-year growth of 25%, reversing a previous decline.

According to the U.S. eGrocery Market Share Report – 3Q24, produced in collaboration with the Brick Meets Click/Mercatus Grocery Shopping Survey, the growth highlights shifting consumer preferences and the increasing role of delivery services in the sector.

While all three fulfillment methods, Delivery, Pickup, and Ship-to-Home, contributed to the growth, the impact varied. Ship-to-Home sales grew by 15%, Pickup rose by around 5%, and Delivery stood out as the fastest-growing segment, reinforcing the importance of providing flexible fulfillment options. Notably, the Mass format gained significant market share, driven by strong performance in both Delivery and Ship-to-Home, even as supermarkets continued to face declines.

Throughout the third quarter, Mass retailers, including giants like Walmart, saw their share of Delivery sales rise by 390 basis points year-over-year, reaching 52.7%. In contrast, supermarkets experienced a decline of 250 basis points, capturing just under 38% of Delivery sales.

Similarly, in the Ship-to-Home category, Mass expanded its share by 150 basis points to 16.4%, mainly at the expense of Amazon, which saw its share decrease to 50.1%. However, Mass retailers experienced a slight drop in Pickup sales, down 70 basis points from the previous year, likely due to increased membership promotions boosting demand for delivery services.

Mass, and Walmart in particular, have demonstrated the value of better understanding online shoppers’ preferences while also leveraging its vast store network and digital reach to grow faster than the overall market.

David Bishop, partner at Brick Meets Click.

The report also revealed a rise in the monthly active user (MAU) base for online grocery shopping, increasing from 54% to 56% year-over-year. Additionally, more consumers are dedicating a larger portion of their grocery budget to online shopping, with the share of MAUs spending 25% or more of their weekly budget online growing by over three percentage points compared to 3Q23.

As online grocery spending resumed its upward trend, it reached 14.6% of total grocery expenditures in 3Q24, reversing a decline observed in the same quarter last year. Pickup and Delivery methods together contributed 12.0% to total online sales, gaining 110 basis points from the previous year. However, customer loyalty in delivery services has shown a decline, as reuse rates dropped across both supermarkets and Mass retailers.

The gap between customers’ intention to reorder from Mass versus supermarket delivery widened from 5.5 points in 3Q22 to 10.2 points in 3Q24, reflecting a shift towards Mass delivery services, partially due to the appeal of first-party delivery experiences offered by companies like Walmart.

Mark Fairhurst, Chief Growth Officer at Mercatus, commented on the need for supermarkets to innovate in response to these challenges. “To compete effectively against giants like Walmart, supermarkets must deepen their customer connections and enhance their service. Leveraging customer insights is crucial for creating personalized experiences and offering targeted savings to customers—but that’s only possible when retailers can effectively operationalize the data.”

Breaking down the monthly performance, July, August, and September 2024 reported sales of $7.9 billion, $9.9 billion, and $9.5 billion, respectively. While September’s total sales were slightly lower than August’s, the month saw a stronger performance than expected, driven by promotional campaigns from delivery service providers. These efforts aimed to attract new customers to membership and subscription programs, sustaining growth despite typical seasonal trends.

For a deeper understanding of these trends, the report recommends consulting the full eGrocery Market Share Report – 3Q24 or accessing the latest insights through the Brick Meets Click eGrocery Dashboard.

The U.S. eGrocery Market Share Report is a quarterly analysis by Brick Meets Click, sponsored by Mercatus, providing insights into the shifting dynamics of the eGrocery market. It is based on responses from over 5,000 U.S. adults across various retail formats and fulfillment methods. Data collected between July 2021 and September 2024 offers a comprehensive view of how the sector has evolved, helping grocery retailers and suppliers stay ahead of market changes.

Brick Meets Click focuses on providing strategic insights and analytics to help retailers adapt to the evolving grocery landscape. Mercatus, on the other hand, drives digital transformation for retailers, empowering them to enhance customer engagement and streamline operations through contextualized commerce solutions.