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Walmart captures more than one-third of online U.S. grocery sales

Walmart Q2 2023 online grocery share
Walmart is becoming a major online grocery player.

Walmart is increasing its lead over U.S. supermarket retailers in online sales.

According to a new study, “Measuring the Online Grocery Market: eGrocery Share in the U.S., created by Brick Meets Click and sponsored by Mercatus,” Walmart was responsible for nearly 36% of all U.S. grocery sales in the second quarter of 2023. This represents more than a 5% year-over-year increase in U.S. online grocery share for Walmart and a new high point in grocery e-commerce for the discounter.

In addition, Brick Meets Click analysis indicates the benefits of Walmart’s in-store pickup offering helped to drive its share increase, which finished at 48% for the quarter, almost two percentage points higher than the second quarter of 2022.

Walmart’s share (excluding Sam’s Club) of U.S. online grocery sales first surpassed that of supermarkets in the third quarter of 2022, when food-at-home price inflation peaked, and the retailer has been gradually building its market share each quarter since.

While supermarkets held a 1.5-percentage-point U.S. online grocery share lead over Walmart during the second quarter of 2022, Walmart had a 5.7-percentage point share advantage during the same quarter in 2023.

Target, a chief rival of Walmart, showed moderate online grocery growth over the last two years. It gained 0.7 percentage points year-over-year in 2022, and finished the second quarter of 2023 holding approximately 7% of U.S. online grocery sales.

“The combined effect of price inflation and the expiration of COVID financial supports has triggered a flight-to-value as purchasing power remains under pressure,” said David Bishop, partner at Brick Meets Click. “This means it’s vital for grocers to offer customers more ways to save money while also providing the experience that online shoppers expect, as cost considerations will weigh more heavily than convenience for cash-strapped households in the second half of this year.”

[Read more: Where are online grocery shoppers going?]

U.S. household purchasing power drops

Related to this research, an independent analysis of CPI data from the Bureau of Labor Statistics, also conducted by Brick Meets Click, indicated that the purchasing power of U.S. households dropped more than 7% year-over-year during the first half of 2023, following a year-over-year decline of more than 9% during the same period in 2022.

In comparison, purchasing power slipped only 0.5% and 1% year-over-year during the first halves of 2018 and 2019 (pre-pandemic), respectively.

Pickup gains popularity

When it comes to how consumers are receiving their online grocery orders, Brick Meets Click analysis shows that pickup, a lower cost-to-use service compared to delivery, has steadily expanded its share of U.S. online grocery sales over the last several years.

In 2022, pickup gained 0.8 percentage points year-over-year during the second quarter versus the prior year and in 2023, it captured another 1.9 percentage points, ending the second quarter with a nearly 48% share of the U.S. online grocery market.

Total online grocery sales drop

Walmart gained share in a contracting market, as total U.S. online sales were down 1.1% in the second quarter 2023 compared to the prior-year period. Brick Meets Click analysis found the main driver of the sales decline was fewer orders completed per household, down 5% year-over-year for the quarter.

[Read more: Online grocery sales fall in July despite customer growth]

In addition, the share of U.S. households that completed one or more online orders during the second quarter of 2023 contracted by 2.75 percentage points year-over-year to just under 53%. According to Brick Meets Click, this overall pullback was due to contractions across the three lower quartiles of online spending; meanwhile, the households who report doing at least 75% of their grocery spending online expanded by almost three percentage points year-over-year.

This analysis is based on 21,799 responses compiled over the 12 months of 2021, 20,948 responses compiled over the 12 months of 2022, and 11,001 responses over the first six months of 2023 from adults 18 years and older who participated in the household’s grocery shopping.

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