Digital Grocery Continues Slow Burn Growth

Introduction to the Digital Grocery Market in 2024

Digital grocery is recapturing customers’ hearts, minds, and wallets, regaining much of the market share it lost over the past few years.  

During the pandemic-induced shutdown, consumers turned to digital grocery out of necessity. Many got hooked on the ease and convenience and became loyal digital shoppers long after in-store shopping reopened. However, many still preferred the in-store experience and happily returned to their local supermarket aisles, reducing digital’s market share.

Digital Grocery Market Share Grows in Q1 2024

Grocery Doppio began tracking digital market share in early 2022 and has witnessed a steady decline in the percentage of overall sales attributed to digital. In Q1 2022, digital accounted for 14.8% of total sales, with its market share declining steadily quarter by quarter until it stood at 12.5% in Q4 2023.

However, in Grocer Doppio’s latest State of the Digital Grocery Performance Scorecard, grocers reported an uptick in digital market share, reaching 13.7% in the quarter, signifying a 5.2% increase year-over-year. In addition, in March 2024, grocers saw digital sales increase 12.8% over February 2024.

Grocery Doppio’s Analysis of Digital Grocery Sales

This increase in digital market share is just one of the eye-opening digital insights in Grocery Doppio’s latest scorecard. Check out the full report here for an in-depth look at the segment's current state. Below is a quick taste of some of the other key findings:

Recent Trends in Digital Grocery Sales and Market Dynamics

Up until this latest quarter, digital’s market share had been shrinking. However, over the past year, Grocery Doppio has been tracking a steady increase in the total value of digital sales. Digital sales have increased from $29.9 billion in Q1 2023 to $31.5 billion a year later.

In addition, overall grocery sales continue to increase. In Q1, sales topped out at $230 billion, a 6.7% increase over Q1 2023. Digital sales also increased in this time period, up 5.2% year-over-year.

While this increase could be chalked up to inflation-powered rises in grocery prices, it is not the whole story. While basket prices increased 6.1% for an identical basket from Q1 2023 to Q1 2024, the number of items increased by 2 — customers are buying more and spending more.

Inventory Concerns

Inventory availability has greatly increased over the past year. While disruptions in the supply chain are inevitable due to unforeseen global circumstances, 72% of grocers report better inventory performance in Q1 2024 compared to a year ago.

However, this improved inventory performance is being enjoyed disproportionately by large grocers. Across the industry, items were substituted in orders by an average of 2.1%, but among the industry’s biggest players — those with revenue north of $10 billion — the average drops to 1.7%. Even more striking is that for the industry’s smallest operations — with revenue less than $1 billion — the substitution rate jumps to 9.4%.

Through their buying power and front-of-the-trough supply chain hierarchy, the big boys can keep products on the shelf with much greater consistency than the industry’s niche players.

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