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US eGrocery Sales 5 Year Forecast – January 2023


Mercatus and Brick Meets Click have been providing monthly insights into US eGrocery Sales since the onset of the pandemic. We’re pleased to now offer The US eGrocery Sales 5 Year Forecast from Brick Meets Click and sponsored by Mercatus.

The forecast is a valuable tool that projects the future of the eGrocery market into 2027. This forecast is based on a proprietary model that combines extensive research and insights from Brick Meets Click with secondary sources from government agencies, providing a comprehensive and accurate projection of the eGrocery market.

The forecast is divided into three segments: Delivery, Pickup, and Ship-to-Home. Delivery includes orders received from a first- or third-party provider such as Instacart, DoorDash, Shipt, or the retailer’s own employees, providing a clear picture of the delivery service market. Pickup includes orders received by customers either inside or outside a store or at a designated location/locker, providing a clear picture of the in-store pickup market. Ship-to-Home includes orders received via common or contract carriers such as FedEx, UPS, USPS, etc, providing a clear picture of the ship-to-home market.

As the eGrocery market continues to grow in importance, it is crucial for retailers to have a clear understanding of the market trends and opportunities. This forecast can provide that understanding and help retailers make informed decisions about their online strategy, such as identifying which segments to focus on, how much to invest in delivery and pick-up services, and how to increase their market share. Furthermore, it can provide retailers with a sense of how the market will develop in the next 5 years, allowing them to make better decisions on how to invest in the eGrocery market, ultimately increasing their competitiveness and profitability in the long-term.

The key research notes suggest that in order to be successful, grocery retailers should focus on finding ways to do more with less. The forecast suggests that sales growth remains constant, but not equal to previous years. Growth will become more challenging while pressure on the bottom line will increase. To succeed, retailers should work smarter, not harder, by understanding their customers and leveraging why they shop with them. Instead of taking a less-disciplined fast-follower approach, companies should focus on creating strategic fit among various activities that will improve margins and appeal to their core customer targets. Offering an online service or following the pricing practices of rivals alone will not create differentiation or advantage. To outperform the market, companies should focus on creating higher-order fit.

Coming off the elevated growth rates in 2020, 2021 and less so in 2022, the forecast predicts a steadier pace in online grocery sales growth, with a CAGR of 11.7% from 2023 to 2027. This rate of growth is attributed to the combination of rising inflation, reduced purchasing power leading to a shift towards price-value players, and an aging and shrinking household demographic in the US.

Online grocery sales are suggested to decline in 2023, with a decrease of 3.1%. However, this trend is not expected to continue in the long term, as online sales are predicted to return to a positive growth trajectory in 2024 and beyond. Despite the short-term pull back, it is important to note that customers who take a break from online shopping are not expected to be lost permanently. In fact, engagement rates are forecasted to strengthen in 2024 as economic conditions improve and online grocery shopping experiences become more seamless.

The Brick Meets Click/Mercatus forecast proposes that Pickup will gain a larger share of the U.S. market in the coming years. Pickup is expected to capture a staggering 50% of the eGrocery market by 2027, solidifying its position as the go-to choice for households. Factors such as cost effectiveness and the ability to effectively distribute large grocery orders have made Pickup a more favorable option for consumers. On the other hand, over the 5 years, Delivery is predicted to struggle, giving up the gains it made during the pandemic, which were driven by both need and financial incentives. Consumers will consider the cost of using the service and the quality of service when deciding whether to use Delivery. Additionally, population declines in core markets are also expected to impact the growth of Delivery. And Ship-to-Home is expected to slow down as households find more value in using Delivery or Pickup. Additionally, contraction in the Pure-Play and DTC segments will also contribute to the slowing of Ship-to-Home.

The 5-year forecast is an in-depth analysis that delves into multiple macroeconomic expectations and their implications. The report provides a comprehensive understanding of the current market trends and future projections for the economy:

  • Expectations for grocery inflation show a decline from its 2022 peak, but inflation will persist above historical, pre-COVID levels through 2027. If a near-term economic downturn triggers further impact/stimulus payments by the Federal and/or state governments, efforts to lower inflation via monetary policy by the Federal Reserve will be complicated and extended. This trend has implications for households, as they will search for savings, looking for ways to avoid paying more than necessary. This will create a collision between cost and convenience from the customer perspective, motivating changes in household purchasing patterns into 2024, such as where they shop (Grocery or Mass), how they shop (in-store or online), what they buy (store brands vs. manufacturer), and/or how they complete the shop (Pickup vs. Delivery). These savings-focused behaviors will tend to depress U.S. sales growth.
  • Expectations for U.S. population growth show a continued slowdown, while the population becomes older as the >60 age group expands significantly compared to all other groups. This trend has implications for overall grocery spending, as it faces downward pressure due to the shrinking and aging of the population. Birth rates are expected to continue declining, while death rates will continue to rise, although at a slower rate. Net migration gains, albeit smaller than in the past, will continue to be the main driver of population growth.
  • Expectations of U.S. households show that they will grow at a faster rate than the overall population, as single-person households gradually increase, marriages decline, and birth rates continue to drop. However, this trend has implications for spending, as households become smaller and older, leading to downward pressure on spending at the household level. Despite this, overall spending will benefit from the faster expansion of households, as the incremental value of adding one single-person household is much greater than that of adding one person to an existing two-person household. Additionally, demographic shifts will also impact spending, with the older age group (60+) accounting for more than one-third of overall growth in grocery spending and the 30-44 group contributing one-half of online sales gains.

In conclusion, our review of the Brick Meets Click/Mercatus US eGrocery Sales 5-year forecast is just the tip of the iceberg. The official research report delves deeper into the data with over 50 research and data points, including detailed charts and comprehensive explanations. This report is a valuable resource for regional grocers looking to make informed, strategic decisions for their business. If you’re interested in obtaining a copy of the report, reach out to Mercatus directly to request one. For all others who want a copy, visit the Brick Meets Click website to explore other ways you can access this insightful research. Don’t miss out on this opportunity to gain a competitive edge in the ever-evolving eGrocery industry.

Read the complete press release for the Brick Meets Click/Mercatus 5 Year Forecast here.


David Bishop

David Bishop

Partner, Brick Meets Click