Key Takeaways
- U.S. online grocery sales projected to reach $120 billion by 2028, growing at 4.5% annually.
- Online grocery sales are expected to account for 12.7% of total grocery sales by 2028.
- Pickup sales will grow at the fastest rate (5.4%), nearing 47% of all online grocery sales in five years.
Growth in Online Grocery Sales
According to a new report by Bricks Meets Click, U.S. online grocery sales are anticipated to reach $120 billion by 2028, with an annual growth rate of 4.5%. This rate is significantly higher than the 1.3% projected growth for traditional in-store grocery sales during the same period.
The report indicates that total e-grocery sales, which include delivery, pickup, and ship-to-home services, are expected to make up 12.7% of total grocery sales in the U.S., reflecting a 170 basis point increase from 2023. Additionally, online grocery sales, excluding ship-to-home, are projected to account for 10.7% of total grocery sales within five years.
David Bishop, a partner at Bricks Meets Click, highlighted two significant challenges impacting the e-grocery forecast. First, the market is maturing, as most potential consumers have already tried online grocery shopping at least once. Second, despite recent drops in inflation, its lingering effects are leading consumers to prioritize value, which may dampen overall sales growth.
As competition intensifies in this slower-growing market, retailers are likely to focus on enhancing their first-party (1P) platforms. The goal is to better manage costs and improve the customer experience, thereby countering pressures from third-party (3P) platforms, which have historically been more costly for consumers.
The report also notes that pickup sales are expected to outpace delivery and ship-to-home options, with a projected growth rate of 5.4% compared to 4.4% for delivery and 2.8% for ship-to-home services. By the end of the five-year forecast period, pickup sales are expected to account for nearly 47% of all online grocery sales. This increase in pickup options can be attributed to a growing consumer demand for convenience, particularly in suburban markets that have traditionally lagged behind in delivery service availability.
In summary, the landscape for online grocery shopping is changing, with key trends pointing toward increased competition, a shift in consumer habits, and a greater emphasis on pickup services. Retailers are adapting by enhancing their own platforms to better cater to evolving consumer needs in this competitive environment.
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