Walmart took 37% of grocery spending in Q2

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Brief description of the dive:

• Walmart captured 37% of the U.S. online grocery market in the second quarter of 2024 — the highest share in the company’s history — according to a new report from Brick Meets Click and Mercatus released Tuesday.
• Meanwhile, grocers continued to lose share in online sales, finishing at just over 27%, and lost ground to delivery retailers.
• The report’s findings underscore how Walmart and other mass retailers pose a growing threat to supermarkets’ e-commerce revenues.

Diving Insight:

Grocery stores’ share of e-grocery sales has been falling to retailers, particularly Walmart, since early 2022, when inflation hit record levels, according to the report. Supermarkets in particular are losing the delivery battle to companies like Walmart.

This time last year, grocers held a lead in delivery share over retailers, but have lost momentum over the past year. In the second quarter of this year, grocers fell behind retailers in total category sales by nearly 10 percentage points. Walmart was a driving force behind that shift, with a nearly eight-percentage-point increase in delivery share year over year.

As noted in the report, grocery retailers saw a slight increase in the delivery category between the first and second quarters of 2024 thanks to recent promotional efforts by Instacart.

For pickup, mass retailers captured nearly 60% of the segment, down just 100 basis points year over year. In comparison, supermarkets ended the second quarter with nearly 30% share, down 210 basis points year over year. Pickup remains the dominant method for online grocery order pickup, according to the report.

Brick Meets Click noted that the mix of supermarket orders was skewed more towards delivery, accounting for almost 50% of online orders in the second quarter of this year. The report noted that retailers have seen order collection gain share as more supermarkets introduce the service.

Meanwhile, the opposite trend is happening for retailers who consider pickup as their primary pickup method but are seeing a “significant shift” toward delivery, according to the report. For retailers, the shift is primarily due to Walmart’s growing emphasis on first-party services and first-party distribution for delivery orders.

The results show that grocers should not expect relief from the pressure caused by consumers choosing to shop at mass retailers for groceries. In the second quarter, the percentage of supermarket shoppers who also shopped at mass retailers jumped 370 basis points to a total of more than 32%, with about one in five shopping at Walmart.

“(Walmart’s) execution of its omni-channel strategy and operational efficiencies supported by extremely high order demand have allowed Walmart to consistently deliver the experiences customers expect while reducing the costs of fulfilling online orders,” Brick Meets Click partner David Bishop said in a statement.