Study: Instacart fueling online grocery market

Supermarket chains like Kroger, Publix and Aldi lifted their online sales last year through Instacart, which remains the main growth driver in the e-grocery delivery market, according to retail and consumer goods analytics firm 1010data.

In 2021, conventional grocers all raised their sales share as sellers via Instacart’s platform, including gains of 2% for Aldi and 1% apiece for Kroger and Publix, New York-based 1010data said in its “Online Grocery Mini-Report,” released last week. Warehouse club chains Costco Wholesale and BJ’s Wholesale Club, however, lost share on Instacart’s platform, 1010data noted.

“We might see this trend continue to play out with wholesale retailers, as customers generally shop wholesale for large, bulk orders, which are likely easier to browse in-store,” 1010data said in its report, adding, “Instacart delivery offsets the savings that customers look to achieve by shopping wholesale.”

According to 1010data's analysis, Instacart generated over 50% of the grocery market's absolute growth last year.

Overall online grocery sales climbed 8% year over year in 2021, topping the 6% growth for the total e-commerce market but below Instacart’s 14% full-year growth, 1010data reported. The firm’s analysis also showed a stronger year-to-date growth rate for Instacart over the January-to-October period last year, at 19% versus 15% for the total grocery category. San Francisco-based Instacart, too, eclipsed Target Corp.-owned rival Shipt, which 1010data said has a “much smaller market share” and saw full-year 2021 sales drop 31% from a year earlier, including a decrease of 27% for the January-to-October period.

Related:U.S. online grocery sales moderate in January

“Despite new entrants in the grocery delivery space, Instacart continues to dominate the market and secure strategic growth,” 1010data stated in its report. “Since Instacart is one of the top merchants in the online grocery space, this means Instacart is really driving growth for the grocery category online. Instacart was responsible for over 50% of absolute growth that occurred in grocery during 2021,” the analytics firm noted.

On the product side, sales through third-party delivery platforms Instacart and Shipt are focusing more on center-store groceries and less on perishables and nonfoods like household goods, according to 1010data. For example, during the January-to-October span in 2021, Instacart and Shipt’s combined sales rose 15% year over year for salty snacks, 32% for soft drinks, 23% for juice, 38% for bottled water and 15% for crackers, whereas their sales decreased 9% for eggs, 4% for ice cream, 4% for toilet paper and 4% for paper towels.

“There is a slight shift in the types of products being purchased through grocery delivery, which may indicate categories that customers prefer to shop for in-store,” 1010data explained. “Shelf-stable beverages and foods are driving increased sales on Instacart and Shipt combined, while sales for perishable items and household items are declining.”

Related:Walmart, Amazon lead as consumers’ online grocers of choice

The 1010data analysis also cited meal kits as “making an impact” in online grocery, particularly through Instacart and Walmart. Sales of items with a mention of “meal kit” surged 388% last year, with more than 85% of those sales coming via Instacart and Walmart. High-performing brands include Lunchables, Armour Lunchmakers and Mountain House.

“Instacart has seen over 1,500% growth when zooming in on items with a mention of ‘meal kit’,” according to the report.

The trend has been even stronger for snack kits, which saw 2,900% year-over-year online growth in 2021. The e-commerce market size for that category was $56 million last year, compared with $46 million for meal kits.

“The items mentioning ‘snack kits’ realizing accelerated growth are almost entirely coming from the Lunchables brand currently,” 1010data said in its report. “However, we may see other brands enter this space as an alternative or in combination with meal kit SKUs.”