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Digital grocery sales plateau, but confidence rises: report
Grocers also support Instacart IPO and rely less on third-party apps
3 Min Read
Grocer executives overall have grown more confident in their own digital grocery businesses after grabbing 35% worth of market share from third parties from August 2022 through August 2023.Getty Images
TOP TAKEAWAYS
59% of all grocers and 72% of grocers that use Instacart support the company’s decision to go public
84% of grocers also believe their own digital strategies will be able to compete with third-party apps
87% of grocers fear losing touch with customers who use third-party apps
The majority of grocers believe Instacart’s decision to go public is the right strategy, (59% of all grocers and 72% of grocers that use Instacart). However, 84% of grocers also believe their own digital strategies will be able to compete with third-party apps, according to the latest joint report from Grocery Doppio, Incisiv, and Wynshop.
The report was built around data analysis of 1.9 million shopper orders and survey results from more than 35,407 shoppers and 3,376 U.S. grocery executives.
The August grocery industry survey reflects the latest analysis of shopper orders, including grocers’ opinions about Instacart’s imminent IPO, and their relationships with third-party grocery apps. It found that digital grocery sales have plateaued, however, grocers’ confidence is on the rise as they continue to grab market share from third-party apps and rely less on those apps to scale.
The findings indicate this is important as 87% of grocers fear losing touch with customers who use third-party apps, 76% worry about media revenue competition from the apps, and 61% compete with third-party apps for digital talent.
Still, grocer executives overall have grown more confident in their own digital grocery businesses after grabbing 35% worth of market share from third parties from August 2022 through August 2023. Grocery Doppio first asked how many grocers reported needing third-party apps like Instacard to scale in 2021, and 66% said yes. However, today just 53% of grocers reported the need.
“Grocers have developed significant competitive strengths in the digital space since 2021,” said Gaurav Pant, chief insights officer of both Incisiv and Grocery Doppio. “Although they remain wary of competition with Instacart and other third-party apps, they now have a confidence in their own digital capabilities that did not exist two years ago.”
Other key findings from the report included:
Third-party apps gained just 0.1% in sales between July and August
Grocers increased their share of the digital market from 81.9% to 83.6% year-to-date, while third-party apps’ share dropped from 18.1% to 16.4% over the same period
Third parties retain the edge in average basket size, exceeding grocers’ own average basket size by $26
Total grocery sales were $78 billion in August, up slightly from the Q2 average of $75.3 billion
Digital grocery sales were $10 billion in August, up slightly from the Q2 average of $9.8 billion
Digital’s share of all grocery sales was 12.8% in August, up slightly from 12.7% in July, but down from the Q2 average of 13.1%
“Instacart’s IPO will be good for the digital grocery ecosystem,” added Charlie Kaplan, chief revenue officer at Wynshop. “We expect to see grocers and third-party apps alike up their digital game, investing more in personalization, inventory management, fulfillment efficiencies, and loyalty, to grow profitable digital grocery businesses.”
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