Walmart now accounts for one-third of all online grocery sales

Walmart reached a new milestone in e-commerce grocery sales during the second quarter, capturing more than a third (36%) of the U.S. market, according to a report released Wednesday by data analytics firm Brick Meets Click.

The study “Measuring the Online Grocery Market: eGrocery Share in the U.S.” sponsored by e-commerce provider Mercatus, noted that Walmart’s new market high was up 5 percentage points from the same period last year.

The news follows a Numerator report released earlier this month showing that the Bentonville, Arkansas-based retailer captured slightly more than a quarter (25.2%) of all grocery sales for the first half of 2023. The retail giant attributed the boost—up 1.5 percentage points from 2021—to "convenience in addition to price,” CEO Douglas McMillon said in May.

Walmart first surpassed the supermarket sector in digital market share in the third quarter of 2022, the report explained. That quarter, food-at-home price inflation peaked. Walmart has since maintained its position in the top spot. The mass merchandiser now enjoys a 570-basis point advantage over its competitors.

“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, in a statement. “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.”

The decline in purchasing power is partly responsible for Walmart’s market dominance over the last year, according to the Brick Meets Click report. Consumer price index data from the Bureau of Labor Statistics shows purchasing power dropped 7% in the first half of 2023, compared to the previous year. Pre-pandemic purchasing power declines were far less dramatic, down 0.5% in the first half of 2018 and 1% in the first half of 2019.

Overall, the pickup method of purchasing groceries online also continued to grow during the second quarter, gaining 1.9 percentage points from the same period in 2022 to make up 48% of the U.S. market, according to the report. That growth was driven in part by more mass merchandisers and grocers offering pickup as a service.

Walmart rival Target experienced moderate growth in digital grocery sales during the second quarter, capturing 7% of the market. Target’s prices, which fall somewhere between Walmart and the overall supermarket industry, helped drive its e-commerce traffic, according to the report.

Sales in the overall e-commerce grocery category dropped 1.1% during the second quarter, a result of total orders dropping 5% year over year for the quarter. Just under 53% of U.S. households made at least one online order during the period, for a decline of 275 basis points.

Households that reported making 75% or more of their grocery purchases online expanded by 292 basis points for the quarter.

“As competition for the shopper intensifies, regional grocers should be leveraging analytics and insights to provide customers with personalized recommendations, discounts and offers as well as developing targeted, cost-effective strategies to encourage and reward repeat purchases online and in-store,” Sylvain Perrier, president and CEO of Mercatus, said in a statement. “In addition, grocers can expand the online market they serve by offering pickup as a lower-cost alternative to delivery.”