2024 eGrocery Market Share Analysis: How To Retain Customers Through Better Engagement

Swimming upstream. An uphill battle. David vs. Goliath. 

No matter how you phrase it, competing with the larger budgets of mass retailers has become the biggest challenge facing grocers. 

In 2024, this challenge was exacerbated by Walmart and other eGrocery leaders leveraging aggressive delivery discounts tied to subscription memberships to remove a key barrier—explicit delivery fees—for online grocery shopping.

Their strategy is as straightforward as it is powerful: combine lower product prices with heavily discounted fulfillment, attach these to annual membership plans, and use it to both attract and retain customers. By lowering costs on both products and fulfillment, they’ve strengthened their grip on the two primary drivers of grocery consumer behavior: convenience and value.

The results speak for themselves. 

Analysis of this past year’s quarterly U.S. eGrocery Market Share Reports shows how Walmart and other major retailers steadily gained market share, while the supermarket segment’s share continued to decline.

Grocers Need a Solution That Works For Them

At first glance, it looks like a no-win situation for grocers.

Lowering product prices to match Walmart’s margins would erode profitability, while slashing fulfillment fees to compete with discounted delivery subscriptions would only deepen the financial strain.

So how can grocers fight back against a strategy they can’t afford to replicate?

Look deeper at what Walmart and the other major players are doing. They’re playing to their strengths—leveraging deeper pockets and scale to make price and convenience their competitive edge. 

Grocers must do the same by focusing on what sets them apart: customer engagement.

Mass retailers thrive on volume and efficiency, but they struggle to create the kind of meaningful, personalized connections that keep customers loyal beyond price incentives. 

Regional grocers, on the other hand, have a unique ability to build deeper relationships, craft personalized experiences, and deliver value in ways that Walmart and other big retailers can’t replicate.

By shifting focus from competing on cost to competing on connection, grocers can drive loyalty, increase retention, and ultimately regain and retain their market share.

Recap of Market Share Trends From 2024

The quarterly U.S. eGrocery Market Share Reports from 2024 highlight how eGrocery sales have evolved—and how Walmart in particular has capitalized.

Here are the standout data points:

1. Q1 2024: The supermarket segment fell below 30% market share, while Walmart surged to 37.4%. Walmart’s pricing advantage and omnichannel strategy continue to draw customers.
2. Q2 2024: Walmart hit its highest market share to date at 37%, driven by growth in its subscription service, Walmart+, and a first-party delivery focus. Meanwhile, supermarkets dropped to 27.3%.
3. Q3 2024: Delivery sales became explosive, growing 24.6% YOY. Walmart maintained its lead with 35.1% of total eGrocery sales, while supermarkets’ share contracted to 25.8%. 
4. Q4 2024: Delivery surpassed pickup in total sales for the first time, capturing 41.5% of orders. Supermarkets’ share contracted to 26.9%, as Walmart reached a new high of 38.6%.

Why Customer Engagement Is the Key to Protecting Market Share

Grocers aren’t losing market share because they lack quality products or local appeal—they’re losing because mass retailers are creating higher customer expectations for value and convenience that only they can afford to fulfill. 

Again, it’s a smart move. But it’s not a checkmate. 

The underlying strategy here is about leaning into areas of strengths. As I stated in the introduction: By leveraging advanced customer engagement strategies, grocers can turn their natural strengths into powerful differentiators that mass retailers can’t replicate.

What Does Enhanced Customer Engagement Look Like? 

But how do you do that?

It begins by extending the high-touch, personalized service grocers are known for into the digital shopping experience of your customers. 

Today’s shoppers demand seamless, meaningful interactions across every touchpoint—whether online, in-store, or through an app. This is where grocers have an opportunity to stand out by creating personalized, digital experiences that deepen loyalty through more meaningful relationships and reduce the appeal of competitors.

Actionable Customer Engagement Strategies for Grocers

But creating meaningful grocer-to-customer relationships requires more than just good intentions. Delivering effective customer engagement requires a strategic, data-driven approach that strengthens interactions across every touchpoint.

Here are six customer engagement strategies grocers can use to drive retention, deepen loyalty, and compete—without sacrificing profitability.

1. Build and Leverage First-Party Data

At the heart of engagement is understanding your shoppers.

The more grocers know about their customers—what they buy, how often they shop, and what offers resonate—the more effectively they can engage them in ways that feel personal and valuable.

By unifying first-party data from in-store purchases, loyalty programs, digital interactions, and fulfillment preferences, grocers can develop a more complete picture of their customers and employ targeted engagement strategies that drive retention.

Once consolidated, this data allows grocers to segment shoppers based on factors such as spending habits, new accounts, or lapsed and churning customers. 

For example, a high-spending customer might receive early access to promotions, while a lapsed shopper could be re-engaged with a personalized incentive. If a customer regularly chooses pickup, targeted promotions can encourage repeat use. If they rely on delivery but aren’t part of the loyalty program, a tailored discount can drive sign-ups.

2. Redefine Loyalty Programs for Modern Shoppers

Loyalty programs have long been a staple of grocery retail, but traditional models no longer hold the same weight with customers. 

Today’s shoppers expect more than basic point systems or generic discounts. They want personalized, dynamic rewards that feel relevant to their shopping habits.

Look at how Walmart has driven sign ups for Walmart+ through deep discounts and encouraged repeat purchases though reduced delivery fees tied to the membership plan. Rather than offering blanket discounts, grocers can use the customer data they’ve collected to drive deeper engagement by tailoring loyalty programs to individual behaviors.

If a customer frequently buys organic produce, they could receive targeted savings on their favorite brands. If they shop at a specific store location, in-store perks—like exclusive member pricing—can enhance their experience.

Loyalty programs should reinforce a sense of connection between the grocer and the customer. The best way to do that is to reward customers in meaningful ways that encourage repeat business.

3. Use Pickup to Strengthen Customer Relationships

Pickup is more than just a cost-effective fulfillment method—it’s a direct engagement opportunity that grocers can use to reinforce brand loyalty. 

Unlike delivery, pickup creates direct engagement opportunities by bringing customers into the grocer’s ecosystem—right to the brick-and-mortar grocery store—where personalized experiences, marketing touchpoints, and the convenience of a nearby location can make a lasting impact.

The importance of this fulfillment method has never been clearer to grocers. 

While the rise of delivery sales has grabbed the majority of attention over the last half of the year, the Q4-2024 Market Share Report revealed pickup sales have grown 11.3% YOY. 

While pickup’s growth may seem modest next to delivery’s 30%, it came completely organically without the benefit of the industry’s biggest players offering promotional discounts and massively reduced fees.

This presents a valuable opportunity for grocers to enhance pickup services and integrate them into their engagement strategies.

One way to maximize pickup’s potential is by tying it into loyalty and membership programs. Just as Walmart+ has made reduced delivery fees a premium perk, grocers can incentivize pickup through exclusive benefits like no fees, priority time slots, or enhanced service options for members.

By leveraging pickup not just as a fulfillment method, but as a strategic engagement tool, grocers can create deeper relationships, drive repeat business, and retain customers in a way that mass retailers aren’t offering.

4. Shift to First-Party Fulfillment and Own the Customer Experience

Grocers miss critical engagement opportunities when they rely on third-party platforms for fulfillment—especially pickup.

Instacart and DoorDash may offer short-term convenience, but they come with hidden long-term costs that grocers can’t afford to ignore. 

When customers order through third-party marketplaces, grocers lose control over their most valuable assets—customer experience, shopping data, and engagement opportunities. Customers interact with a third-party brand instead of the grocery store, leading to weakened loyalty, lost personalization, and diminished marketing potential.

By moving fulfillment in-house, grocers regain control of the entire customer journey—from personalized promotions to loyalty integration. Rather than surrendering this control to a third party, grocers can design a seamless, branded experience that maximizes engagement and keeps customers within their ecosystem.

With pickup experiencing notable organic growth this past quarter, owning fulfillment channels becomes even more essential. It enables grocers to integrate loyalty perks, exclusive offers, and enhanced services—such as express pickup for members—into a unified and differentiated experience.

As grocers increasingly realize the deep connection between fulfillment and customer engagement, shifting to first-party fulfillment will be essential. This move not only strengthens relationships and retention but ensures that each customer interaction drives long-term loyalty.

5. Offer Personalized and Targeted Marketing Campaigns

A recurring theme across successful grocery strategies is the transformative power of data-driven engagement. 

Whether it’s building loyalty programs, optimizing pickup experiences, or moving to first-party fulfillment, the underlying thread is the ability to use customer insights to deliver tailored meaningful experiences.

That same principle applies to marketing where personalization can turn ordinary campaigns into high-impact drivers of engagement and revenue.

As highlighted with modern loyalty programs, today’s customers don’t seek generic discounts—they demand relevant, personalized savings that resonate with their needs.

This is why delivery discounts have been a key success driver for Walmart. By identifying that fees hindered customers from embracing delivery convenience, they removed the obstacle and unlocked significant growth.

Rather than relying on unsustainable, broad-based discounts, grocers can offer strategic, targeted savings tailored to individual customers. Delivering these savings through timely reminders and personalized recommendations enhances customer satisfaction and loyalty, creating a streamlined shopping experience.

Consider these examples:

• A customer who consistently buys breakfast items could receive targeted promotions for their favorite brands.
• A lapsed shopper could be re-engaged with a personalized offer designed to bring them back.
• A customer who purchases produce and dairy every two weeks could get timely reminders and personalized discounts just before their typical restock date.

By aligning promotions with customer behavior, grocers can drive retention, boost purchase frequency, and strengthen long-term brand loyalty.

6. Create a Unified, Digitally Driven Shopping Experience

But it’s important to keep in mind that personalized engagement doesn’t just apply to promotions—it needs to extend across the entire shopping journey.

When marketing, loyalty programs, and fulfillment strategies operate in silos, customers encounter a fragmented experience. For example, a shopper might receive a personalized discount via email but not see it reflected in their online account. Or they could engage with an in-store loyalty program that feels disconnected from their digital interactions. These inconsistencies create frustration and diminish engagement rather than fostering loyalty.

To compete effectively with mass retailers, grocers must deliver a seamless, unified experience across all touchpoints—whether customers shop in-store, online, or via an app. 

Consider these examples of a truly unified experience:

• A shopper browsing a recipe on the grocer’s website can seamlessly add ingredients to their cart for pickup or delivery.
• A loyalty member sees consistent personalized offers, whether shopping in-store or online.
• A customer who starts an order on mobile can finish it on desktop, with their cart and recommendations remaining intact.

This kind of continuity builds trust, drives retention, and makes shopping feel effortless. By fully integrating digital and physical experiences, grocers eliminate friction and create a cohesive, engaging journey that keeps customers coming back.

Grow Market Share Through Engagement

The data from the 2024 U.S. eGrocery Market Share Reports makes one thing clear: Mass retailers are expanding their dominance by leveraging their size, scale, and pricing power to offer convenience at a lower cost. 

But that doesn’t mean regional grocers are outmatched—it means they need to play to their own specific strengths.

Instead of competing on price, grocers must focus on areas that are a struggle for mass retailers to replicate: deep customer relationships, tailored promotions of quality products, and a seamless shopping journey connected to location.

By implementing a data-driven approach to customer engagement, grocers can:

• Leverage first-party data to understand and anticipate customer needs.
• Build loyalty programs that go beyond transactional discounts and create lasting value.
• Strengthen pickup services as an engagement tool, not just a fulfillment method.
• Own the customer experience by shifting to first-party fulfillment platforms instead of relying on third-party marketplaces.
• Deliver personalized and targeted marketing that aligns with real shopping behaviors.
• Create a frictionless, digital experience that seamlessly connects online and in-store interactions.

Customer engagement isn’t just about creating a better experience—it’s about using improved experience to build loyalty, increase retention, and drive sustainable growth.

Mercatus Helps Grocers Win Back Market Share

This is where Mercatus’ personalization and loyalty solutions come in.

With tools that unify customer data, optimize engagement strategies, and personalize every touchpoint, Mercatus helps grocers extend their high-touch, in-store service into the digital shopping experience of your customers. 

Mercatus drives engagement and loyalty for your grocery business through:

• Unified Customer Data: Consolidates shopper insights, enabling targeted, personalized engagement.
• Programmatic Targeting: Delivers timely, relevant offers based on real purchase behavior.
• Automated Journey Mapping: Keeps customers engaged with personalized triggers, from welcome offers to re-engagement campaigns.
• Flexible Content Containers: Create custom promotions and tailored product collections.
• Dynamic Product Collections: Simplify shopping by curating relevant items like seasonal kits and local favorites.
• Multi-channel Delivery: Ensures consistent messaging across email, SMS, push notifications, and digital ads.
• Workbench Analytics: Get the actionable insights you need to refine loyalty programs and improve engagement strategies.

Discover how these tools enable you to strengthen customer relationships, increase lifetime value, and regain market share—all without sacrificing profitability. Contact Mercatus today and learn how we can redefine your customer engagement and help build a more loyal, connected customer base for your grocery business.