Walmart has firmly established itself as the clear leader in the online grocery market, capturing an astonishing 37% of the U.S. market share during the second quarter of 2024. This all-time high for the retail giant has left grocers scrambling to keep up, as they continue to lose ground in the rapidly evolving e-commerce landscape.
The latest report from Brick Meets Click and Mercatus reveals that while Walmart's dominance continues to grow, grocers are struggling to maintain their footing. With just over 27% of the market share, supermarkets have lost their lead to mass retailers in the delivery segment, a trend that has been steadily increasing since early 2022.
One of the most significant factors contributing to Walmart's success is their ability to adapt to the changing needs of consumers. The retail giant has been investing heavily in its omnichannel strategy, focusing on first-party services and distribution for delivery orders. This approach has allowed Walmart to consistently deliver exceptional customer experiences while simultaneously lowering its cost to serve online orders.
The growing trend of consumers shopping at both supermarkets and mass retailers. In the second quarter of 2024, the share of supermarket customers who also shopped at mass retailers rose by 370 basis points, totaling over 32% with around one in five shopping at Walmart.
Walmart's dominance in the online grocery market has left grocers facing a significant challenge. While they have maintained a stronger presence in the pickup segment, the overall trend points to mass retailers like Walmart continuing to be a rising threat to supermarkets' e-commerce dollars.
Grocers are facing an uphill battle as they try to keep up with the changing market dynamics. While they have seen a slight bump in the delivery category between the first and second quarters of 2024, thanks to recent promotional pushes by Insta cart, it's clear that more needs to be done to compete with the likes of Walmart.
One area where grocers have maintained a stronger foothold is in the pickup segment. Mass retailers claimed almost 60% of the pickup market share, down just 100 basis points year-over-year. By comparison, supermarkets ended the second quarter with a nearly 30% share, down 210 basis points year-over-year. However, pickup remains the dominant receiving method for online grocery orders, according to the report.
The online grocery market is transforming, and it's clear that grocers must adapt and innovate to remain relevant in the eyes of consumers. Investing in their own omni channel strategies, improving delivery services, and offering competitive pricing and promotions will be key to staying ahead of the curve.
