The US online grocery market closed 2024 on a high note, with December sales reaching $9.6 billion—an 18.7% year-over-year (YOY) increase, according to the Brick Meets Click/Mercatus Grocery Shopper Survey. This marks the fifth consecutive month of eGrocery sales exceeding $9.5 billion, capping a year characterized by two distinct periods: a flat first half (1H24) followed by a surge in the second half (2H24).

Annual eGrocery sales climbed 9.1% compared to 2023, driven by aggressive promotions on subscription and membership programs, which became widespread mid-year. These discounts, ranging from 33% to 80%, resonated with budget-conscious shoppers seeking savings and contributed to increased engagement and retention rates among digital grocery customers.

Growth Across Fulfillment Channels

All three eGrocery fulfillment methods—Delivery, Pickup, and Ship-to-Home—saw notable gains in 2H24:

Delivery: YOY growth skyrocketed from less than 4% in 1H24 to over 25% in 2H24, contributing $4 billion in December sales (up 24.6% YOY).
Ship-to-Home: Growth surged from 5% in 1H24 to nearly 20% in 2H24, with December sales climbing 40% YOY to $1.8 billion.
Pickup: After a 4% decline in 1H24, Pickup rebounded with an 8% gain in 2H24. December sales rose 5.3% YOY to $3.8 billion, although Pickup's share of total eGrocery sales fell slightly.

The growth reflects increasing consumer adoption of online shopping and subscription models. As David Bishop of Brick Meets Click noted, “Deep subscription discounts offered customers significant savings, incentivizing repeat orders and fostering brand loyalty.”

Mass Retailers Dominate Online Grocery

While grocery operators made gains in 2024, they continue to face stiff competition from mass retailers, which now account for a growing share of online grocery activity. In December, over half of all monthly active users (MAUs) placed at least one order with a mass retailer, compared to just one-third with traditional grocery operators. Cross-shopping also increased significantly, with one-third of grocery MAUs placing an order with a mass retailer in the same month—a jump of 800 basis points YOY.

Mass retailers also reported stronger repeat intent rates for both Delivery and Pickup services compared to grocers, although the gap has narrowed since 2023. Mark Fairhurst of Mercatus emphasized the importance of personalization and loyalty programs: “Regional grocers looking to boost eGrocery sales should focus on delivering real savings and targeted loyalty perks. AI-driven personalization can help convert occasional shoppers into loyal digital customers.”

Broader Trends Impacting Grocery Sales

The surge in eGrocery sales is part of a larger transformation in the grocery retail sector. Key trends include:

Private Label Growth: With inflation still a factor, private label products gained traction as consumers sought cost-effective alternatives. Reports indicate that 50% of global consumers purchased more private label items in 2024 than ever before.
Increased Technology Adoption: Retailers implemented AI-powered tools for inventory management and demand forecasting. Enhanced in-store technologies, such as smart carts and apps, bridged the gap between online and physical shopping experiences.
Sustainability and Ethical Sourcing: Growing demand for eco-friendly products led retailers to prioritize sustainable practices, including reducing plastic waste and sourcing responsibly.

Looking Ahead: Strategies for Sustained Growth

As online grocery competition intensifies, grocery operators must adapt to meet evolving consumer expectations. Key strategies include:

Investing in Technology: Tools that enable better personalization, seamless shopping experiences, and streamlined operations are crucial.
Expanding Subscription Offerings: Grocers should refine subscription programs to emphasize value and convenience.
Enhancing Loyalty Programs: Leveraging data analytics and AI can help grocers offer targeted rewards and promotions to drive repeat business.

Despite challenges, the future of grocery retail is bright for those willing to innovate. By aligning with consumer preferences and investing in technological and operational excellence, grocery retailers can secure their share of this rapidly evolving market.

References
Brick Meets Click
Mercatus