US eGrocery Market Share Report with Brick Meets Click – Insights From Q2 2024
How to Counter Walmart’s Increasing Share of the eGrocery Market
What’s the most important takeaway from Brick Meets Click’s latest Market Share Report?
Walmart isn’t just expanding its share of the online grocery market; they’re relentlessly pursuing greater growth. And grocers can’t afford to cede any more ground.
The Q2-2024 edition of US eGrocery Market Share Report begins with some alarming news: Walmart captured 37% of the U.S. online grocery market in the second quarter of this year, climbing 150 basis points year-over-year (YOY).
This marks the big retailer’s highest share of the eGrocery market to date. In contrast, the Supermarket segment dropped 250 basis points compared to last year, ending Q2 2024 with a 27.3% share of online grocery sales.
While Walmart’s appeal is often attributed to lower prices, there’s more to the story than cost savings for consumers. The enormous retailer is employing a highly effective omnichannel strategy to retain the customers it initially attracted through lower prices—and expand its share of the eGrocery market even further.
If you’re a regional grocer looking for a way to compete with the latest tactics from Walmart, you have to know exactly what you’re up against. You need to read the complete eGrocery Market Share Q2 2024 report.
To access the report, click the link below. Once validated, you’ll receive it free of charge.
➡️ Download the Q2-2024 eGrocery Market Share Report
The 5 Most Important Takeaways From The Report
1. An Omnichannel Strategy is Driving Walmart’s Growth
Walmart’s 150 bps increase over last year is not only fueled by economic conditions playing into the mass retailer’s inherent pricing advantage, but also key strategic moves that have enhanced the omnichannel experience of its customers. These initiatives have driven subscription numbers for Walmart Plus memberships and increased retail media revenue through more sponsored advertisements.
2. Walmart is Impacting The Profitability of Delivery
Promotions for Walmart’s first-party delivery service have significantly shifted the balance of delivery and pickup sales, extending Walmart’s economies of scale advantage into fulfillment. Despite a push for similar promotions from Instacart, delivery sales have diminished and are becoming less profitable for Supermarkets as a result.
3. First-Party Delivery Strategy Provides Repeated Benefits
Walmart is backing up these promotional efforts with service that customers want to repeat. The strategic shift to first-party delivery has boosted the likelihood of a customer ordering delivery again next month from a big retailer. Mass now has an 11-point advantage in repeat intent rates for delivery services.
4. More Shifting Trends in Fulfillment
Despite an order mix that skews slightly toward delivery, supermarkets are seeing a shift toward pickup, as it captured 47.5% of orders in Q2 2024. Meanwhile, the impact of Walmart’s promotional efforts can again be seen in a dramatic increase in delivery for the Mass segment. Despite this uptick, pickup remains the dominant method.
5. Cross-Shopping is Showing No Signs of Slowing
More than 32% of supermarket customers also shopped with a larger retailer during Q2-2024, with roughly one in five doing so with Walmart. This occurred most frequently within the middle two income groups ($50-$99K and $100-$199K) while both the lowest (>$50K) and highest income ($200K+) groups decreased cross-shopping versus last year.
To learn more about these and other takeaways, download the full report.
5 Recommendations Based on Q2-2024 Market Share Data
1. Strengthen Loyalty Programs
Maintaining customer loyalty has never been more critical for grocers.
Every aspect of this quarter’s Market Share Report reinforces the importance of customer retention and loyalty: Nearly a third of supermarket shoppers cross-shopped with Mass last quarter, repeat intent rates in delivery and pickup are decidedly higher for larger retailers, and Walmart drove enormous growth for its Walmart Plus membership plan through delivery discounts.
Grocers have to cultivate deeper relationships with their customers, moving beyond nominal transactional discounts with loyalty programs that meet customers where they are. That means providing targeted savings and customized convenience—all timed to purchase cycles.
AisleOne’s Loyalty Program Activation utilizes advanced algorithms and machine learning to customize content based on each customer’s behaviors and purchasing patterns. This technology enables grocers to automate targeted marketing, and ensure that offers, incentives, and recommendations are delivered precisely when the customer needs them.
Not only does a strong loyalty program increase the likelihood of greater long-term engagement, it can also be used right away to provide enhanced value to customers by transforming “members only” deals from an in-store benefit into an omnichannel experience.
2. Promote Private Labels
Grocers can’t maintain profitability and provide their customers with the same value as Walmart on national brands.
Not only are these products widely available, but grocers often lose out on direct price comparisons with large retailers. To better compete against Walmart on value, especially in center store aisles, grocers should shift their focus towards promoting private labels.
That means strategically promoting these products within an eCommerce platform.
For instance, Kroger emphasizes private labels by ensuring they appear prominently in generic search results on their mobile app. When customers search for a product without specifying a brand, leading with private labels can drive sales and enhance customer perception of value.
Promoting private labels creates a win-win scenario. Customers benefit from lower prices, and grocers enjoy stronger profit margins. Additionally, private labels can build brand loyalty, as customers associate these exclusive products with the quality and value offered by the grocer.
3. Put Your Customer Data To Use
As we see from this quarter’s Market Share report, consumer behavior isn’t universal.
Some customer segments prefer delivery from a single store; others like to buy different items from multiple stores and utilize a variety of fulfillment options.
To compete with Walmart’s low-cost delivery services, grocers need to better understand their customers on an individual basis and harness that understanding to reach them.
By using a platform that consolidates a variety of data sources, grocers can gain a comprehensive view of each customer journey. With this information, they can translate the specific behaviors and preferences of their customers into highly targeted, automated, and cost-effective marketing campaigns on par with anything that big retailers do.
That’s why we developed AisleOne’s Customer Data Platform to offer detailed data analysis and segmentation capabilities. Through its Workbench Analytics feature, grocers can develop tailored campaigns that reach distinct customer segments.
4. Evaluate Your Relationship With Third-party Delivery Services
Another key insight from the report is how Walmart’s strategic focus on first-party delivery has boosted their market share and impacted fulfillment sales across the eGrocery market.
This might prompt regional grocers to wonder if a third-party reliance is hindering their own ability to compete. While there may be advantages to utilizing a third-party delivery service, there are also drawbacks.
On one hand, partnering with Instacart represents a free service with no margin compression that allows retailers to quickly cater to customers’ immediate needs without the time and investment required to develop their own digital infrastructure.
On the other hand, it also limits the retailers ability to:
- Collect the all-important customer data mentioned above,
- Establish a connection with shoppers that makes them want to return, and
- Tap into the lucrative retail media market for additional revenue streams.
One of the big reasons we saw the repeat intent rate for delivery services from mass increase its gap over supermarkets is likely because of Walmart’s investment in the service aspect of its first-party delivery. It’s not just providing promotions, it’s making sure that initial experience using the promotion is a positive one that customers want to repeat.
Relying on a third-party fulfillment partner doesn’t allow grocers this option. It takes the customer experience out of their hands.
At Mercatus, we want to put more power in the hands of retailers—not less. Our white label, all-in-one eCommerce platform is developed to help grocers build their brand, foster direct relationships with their customers, and ultimately drive sales without sacrificing autonomy to a third-party.
5. Foster a Culture of Innovation
In discussing the Q2-2024 edition of the US eGrocery Market Share Report, Brick Meets Click’s David Bishop suggests there’s a reluctance among some grocery executives to take risks and try new approaches.
Despite the compelling data and successful examples presented, many grocers hesitate to combine innovative solutions like eCommerce with loyalty and engagement applications.
This resistance to change further fragments customer experience and results in missed opportunities for growth. That becomes a major cause for concern when larger retailers like Walmart renew investment in their omnichannel strategies, and deploy highly effective mobile apps that enhance the customer experience online and in-store.
When talking about Walmart as a source of competition, its ability to wield far more resources than regional grocers shouldn’t be understated. However, it also shouldn’t be the reason why grocery retail leaders don’t champion innovation and create an environment where new ideas are welcomed and tested.
To make that process smoother, it’s important that grocers find a technology partner, not just a technology provider.
At Mercatus, we’re committed to helping our retail partners achieve every benefit that our technological solutions provide. That means we work with you to not only implement the technology, but also train staff and communicate benefits to customers.
➡️ Partner with Mercatus to regain your market share
How Do You Take On A Retail Goliath?
The sales figures found in the Q2-2024 US eGrocery Market Share Report from Brick Meets Click clearly demonstrate Walmart’s dominance of online grocery sales.
As much as we work to identify ways to compete, it would be an oversight to not recognize the sheer amount of resources Walmart has at its disposal—and how intelligently it’s using these resources to gain an increasing share of the eGrocery market.
This sizable advantage is precisely why grocers need to embrace technology and enhance their online customer experience, so that it complements in-store service.
Just as Walmart has utilized its financial strength to improve its market position, grocers must invest in their own unique advantages to offer customers an unmatched omnichannel experience.
Contextualized commerce is the only way to do this.
As a seamless integration of digital and physical retail experiences, this strategy brings the personalized, high-touch service grocers are known for into the digital experience. It uses first-party data, operational insights, and advanced personalization techniques to engage shoppers from initial impression to transaction, both online and in-store, ensuring a connected and relevant experience across all channels.
To learn why you need to leverage contextualized commerce and all of the recommendations outlined above, download the complete eGrocery Market Share Q2 2024 report from the link below.
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