• US digital grocery sales will grow another 20.5% this year, reaching $147.51 billion. 
  • Walmart Inc. is the No. 1 retailer in digital grocery and will remain on top, followed by Amazon and Kroger.
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With digital grocery buyers accounting for more than half of the US population, signaling a landmark year in 2021, retailers are rushing 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. And major players such as Uber Eats and Gopuff are expanding their service grounds 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. Between 2021 and 2025, US sales are expected to nearly double with more than $121 billion coming into the market.

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 labor shortage has put delivery drivers and other fulfillment 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 overtime. 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. 

2020 was a boon for those purchasing groceries online for the first time, with a 42.6% increase of 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 high value on same-day delivery more 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.

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 despite more lenient pandemic restrictions. 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 makes 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 spends, 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-fulfillment centers to keep up with a meteoric shift to digital across all categories.

Capturing 23.8% of market share at 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 2023, 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 fulfillment facilities. 

Target and Albertsons are nearly tied for 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 own delivery infrastructure.