Walmart captures record 37% of U.S. e-grocery sales in Q2

Walmart, excluding Sam’s Club, captured 37% of the U.S. online grocery market in the second quarter of 2024, climbing 150 basis points versus last year to mark its highest share level to date, according to a new "U.S. eGrocery Market Share Report" based on data from the monthly Brick Meets Click/Mercatus Grocery Shopping Survey.

Walmart’s year-over-year gains for the quarter build on a multiyear uptrend for the retailer, fueled by economic conditions and key strategic moves that have delivered results, according to a news release.

In contrast, supermarkets continued to cede e-grocery sales share, losing 250 basis points in the recent quarter versus a year ago to finish the second quarter of 2024 with 27.3%. Walmart’s sales share sales (excluding Sam’s Club) began gaining on supermarkets in early 2022 after the expiration of the expanded child tax credit at the end of 2021 and as overall and food at home inflation was growing faster than wages. This led to dramatic drops in the personal savings rate and rapid growth of outstanding credit card balances while rising interest rates further challenged households, the release said.

“Walmart’s reputation for low prices helped to attract households that wanted both the convenience of shopping online and ways to save money in this market,” David Bishop, partner at Brick Meets Click, said in the release. “The execution of its omnichannel strategy, plus the operational efficiencies aided by incredibly high order demand, has enabled Walmart to deliver the type of experiences that customers expect consistently and to lower its cost to serve online orders at the same time.”

Meanwhile, Target has made more moderate sales share gains over the last several years gaining 120 basis points of share versus the second quarter of 2021 and finishing the 2024 second quarter with 7% of e-grocery sales, according to the report. Strong execution — especially in fulfilling pickup orders — and a price gap halfway between supermarkets and Walmart likely offered Target a degree of defense for its online grocery business, the release said.

Walmart’s focus on building its first-party delivery business has produced notable shifts in how delivery and pickup sales fall between the mass and supermarket formats impact profitability, given the higher costs related to fulfilling delivery orders compared to pick-up, according to Brick Meets Click.

Overall, the report showed mass format captured nearly half of all delivery sales in the second quarter of 2024, driven by Walmart’s nearly 8-percentage-point jump in delivery share versus the second quarter of 2023. During the same period, supermarkets went from leading mass in delivery sales share by about a point to trailing by nearly 10 points, although recent promotional pushes by Instacart helped to boost supermarket sales share between the first and second quarters this year.

Other highlights from the new release include:

• In pickup, supermarkets ended the second quarter of 2024 with approximately 28% of the segment’s sales compared to mass, which claimed almost 58%. In fact, mass lost only 100 basis points of pickup sales share versus a year ago, while supermarkets lost 210 basis points. Even with these shifts between the retail formats, pickup continues to remain the dominant receiving method for e-grocery sales in the U.S. with a 45.5% share, down 110 basis points versus the second quarter of 2023.

• Comparing order mix results by format shows divergent trends. Supermarkets’ order mix still skews slightly toward delivery, which accounted for 49.3% of the format’s orders in the second quarter of 2024. However, pickup has continued to gain order share as more supermarkets introduce the service, capturing an additional 700 basis points of share since the second quarter of 2021 and finishing the most recent quarter with 47.5%.
• Meanwhile, the opposite trend is occurring in the mass order mix, as the dominant method continues to be pickup, accounting for 51.8% of the orders but with a significant shift toward delivery, fueled in large part by Walmart’s increased focus on driving more volume through its first-party services and reliance on first-party distribution for delivery orders.

• Looking at repeat intent levels segmented by format and receiving methods shows how Walmart’s strategic shift likely contributed to mass’ stronger performance. The gap in repeat intent rates for delivery services between supermarkets and mass expanded 120 basis points versus last year, currently giving mass over an 11-point advantage. For pickup services, mass enjoys a 15-point gap versus supermarkets, but that gap narrowed by 60 basis points in the latest quarter compared to a year ago.

“Regional grocers can safeguard their online business by targeting budget-conscious households with a convenient, seamless, and personalized digital experience,” said Mark Fairhurst, chief growth officer at Mercatus. “This includes boosting loyalty with points, discounts, and exclusive deals; highlighting unique products and offering bundled deals for savings; and using targeted promotional campaigns like 'Journey to Five' to encourage repeat online purchases.”

The report said competitive pressures on supermarkets do not appear to be letting up as an increasing share of its current online customers are also buying groceries from mass online. The share of supermarket customers who also shopped with mass during the quarter rose 370 basis points, reaching more than 32% in the second quarter of 2024 with roughly 1 in 5 doing so with Walmart. This gain was fueled by increased dual usage within the middle two income groups ($50,000 to $99,000 and $100,000 to $199,000) while both the lowest (less than $50,000) and highest income (more than $200,000) groups decreased cross-shopping versus last year, the release said.