US Grocery Retailing: In-Store and Online Market Report 2023
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Description
Stay ahead of the curve and future-proof your business with Mintel’s US Grocery Retailing: In-Store and Online Market Report 2023. Our full report is packed with consumer-led market intelligence, the latest trends and consumer behaviours affecting your industry. Get a 360° view of the US grocery retail market including market size, share and forecasted growth for in-store and online to help you align your business strategy with the needs of your audience.
Below, we’ve handpicked the key insights analysed in the full report and summarised the core topics.
Topics Analysed in this Report
- The evolution of the omnichannel grocery shopping experience.
- The impact of inflation and economic pressures on the grocery market.
- Where consumers do their shopping and what they look for in their primary grocer.
- Consumers’ shopping behaviors and attitudes toward grocery shopping.
- Consumer interest in shopping concepts and loyalty program benefits.
US Grocery Retail Industry – Current Overview
The grocery retail landscape has undergone a major change, driven by the pandemic and ongoing economic uncertainty. In-store remains the preferred channel, with 98% of US consumers shopping in-store at least some of the time, but online grocery is growing in popularity: 63% of consumers are shopping for groceries online more often than they were a year ago.
- Grocery retailing market size: The online and in-store grocery markets increased by a similar amount in 2022, online by 8.2% and in-store by 8.3%.
US Grocery Market Trends
Convenience vs cost
The pandemic rapidly accelerated grocery ecommerce and consumers are largely sticking with it. As a result, the future of grocery retail is omnichannel. While the store is still preferred, convenience is the primary driver pushing consumers toward more multichannel shopping routines. However the belief that better prices can be found in-store persists, and presents a challenge for online grocery. In an omnichannel environment, it will be essential that pricing is consistent across channels and that consumers have access to easily compare prices online like they would in-store.
Loyalty programs don’t mean loyal shoppers
Currently, grocery loyalty programs don’t always translate to true affinity with shoppers. Nearly a third of US consumers shop with their chosen retailer because they are members of a loyalty program, but this number falls to less than a quarter for younger consumers and parents. Retailers need to do more to find ways to make loyalty programs worth a consumer’s time. Unsurprisingly, most consumers are motivated by discounts on products, though other monetary forms of value, such as cashback rewards or discounts toward a future purchase, are rising in popularity.
To learn how to connect with your audience, purchase our full US Grocery Retailing Market Report 2023. Discover lucrative innovation opportunities to help your business grow during times of financial uncertainty.
Expert Insights from a Retail Industry Analyst
This report, written by Brittany Steiger, a leading retail and ecommerce analyst, delivers in-depth commentary and analysis to highlight current trends in the US grocery retailing market and add expert context to the numbers.
The grocery landscape is still in the midst of an evolution after the pandemic accelerated ecommerce and omnichannel shopping routines. Currently, savings are top of mind amid inflationary pressures and consumers are adapting by shifting toward more budget-conscious behaviors. In the longer term, consumers will be eager for a shopping experience that checks all the boxes on convenience, budget and quality as they increasingly expect a seamless shopping experience across channels.
Brittany Steiger
Senior Analyst, Retail & eCommerce
Table of Contents
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Overview
- What you need to know
- This Report looks at the following areas
- Definition
- Market context
- What you need to know
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Executive Summary
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- Top takeaways
- Consumer trends
- In-store still the primary channel, but omnichannel is the path forward
- Figure 1: Grocery shopping methods, 2023
- Consumers want action on food prices
- Figure 2: Impact of inflation on grocery shopping, 2023
- Shopping behaviors continue to evolve, but generational nuances shift the experience
- Figure 3: Select grocery shopping habits, by generation
- Competitive strategies
- Aldi makes savings a lifestyle
- Figure 4: Aldi releases clothing line, “Aldi Gear”
- Instacart, The Fresh Market leverage generative AI to liven up ecommerce
- Figure 5: Instacart, The Fresh Market tap generative AI to boost the customer experience
- Market predictions
- Figure 6: Total US sales and fan chart forecast of groceries, at current prices, 2017-27
- Figure 7: Grocery outlook, 2023-28
- Opportunities
- Make deal-seeking a destination
- Embrace technology to expand ecommerce and omnichannel capabilities
- Support consumers’ health and wellness goals
- Lean into the omnichannel experience
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Market Size and Forecast
- Inflation driving growth, but volumes are declining
- Figure 8: Total US sales and fan chart forecast of groceries, at current prices, 2017-27
- Figure 9: Multi-outlet sales and forecast of groceries, at current prices, 2017-27
- Continued growth for grocery ecommerce, but pace of growth decelerates
- Figure 10: Total US online sales and fan chart forecast of groceries*, at current prices, 2017-27
- Figure 11: Total US online sales and forecast of groceries*, at current prices, 2017-27
- Inflation driving growth, but volumes are declining
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Segment Performance
- Other multi-outlets outpace supermarkets
- Figure 12: Multi-outlet sales of groceries, by segment, at current prices, 2017-27
- Food and drink still account for the bulk of grocery
- Figure 13: Multi-outlet sales of groceries, by category, at current prices, 2017-27
- Figure 14: Share of total US multi-outlet sales of groceries, by segment and category, 2022
- Health and beauty comprise majority of online sales, but food and drink continue to accelerate
- Figure 15: Total US online sales of groceries*, by segment, at current prices, 2017-27
- Figure 16: Share of total US online sales of groceries*, by category, 2017-27
- Other multi-outlets outpace supermarkets
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Market Drivers
- Food inflation eats away at grocery budgets
- Figure 17: Consumer Price Index change from previous period, all items plus food at home, 2007-23
- What it means for grocery retail: value-conscious behaviors stick around
- Figure 18: Consumers and grocers respond to viral egg prices, 2023
- Low-income shoppers bear the brunt as SNAP emergency allotments end
- Kroger-Albertson’s merger threatens a major shake-up to the grocery landscape
- Figure 19: Coverage of potential Kroger/Albertson’s merger
- What the merger could mean for consumers: fewer choices, higher prices
- What the merger could mean for grocers: reduced competition
- Tech innovation ushers in a new omnichannel era
- Figure 20: Grocery Dive covers tech and automation in the grocery industry
- What it means for consumers: omnichannel drives convenience
- Sustainability remains critical amid the threat of climate change
- What it means for consumers: help me help myself
- Food inflation eats away at grocery budgets
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Competitive Strategies and Market Opportunities
- Make deal-seeking a destination
- Aldi makes it hip to save
- Figure 21: Aldi releases clothing line, “Aldi Gear”
- Support consumers’ health and wellness goals
- Albertsons, Hy-Vee create online health and wellness programs
- Figure 22: Albertsons, Hy-Vee offer health and wellness programs
- Embrace technology to expand ecommerce and omnichannel capabilities
- Instacart, The Fresh Market innovate with generative AI
- Figure 23: Instacart, The Fresh Market tap generative AI to boost the customer experience
- Lean into the omnichannel experience
- Walmart leads the way in omnichannel
- Figure 24: Walmart invests in omnichannel capabilities
- Make deal-seeking a destination
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The Grocery Consumer – Fast Facts
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Grocery Shopping Overview
- Nearly all adults shop for groceries, but many share the task
- Figure 25: Grocery shopping responsibility, by gender and age, 2023
- Most consumers shop at least once a week
- Figure 26: Grocery shopping frequency, 2023
- The store is still preferred, but omnichannel is the future
- Figure 27: Grocery shopping methods, 2023
- Nearly all adults shop for groceries, but many share the task
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The Omnichannel Grocery Experience
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- How consumers choose their shopping method
- Stores suit most shopping occasions, but retailers can innovate in fresh departments
- Figure 28: Shopping method by trip type, 2023
- eCommerce wins on convenience, but some barriers persist
- Figure 29: Attitudes toward shopping method, 2023
- Pricing must be seamless across channels
- Figure 30: Instacart boots customer-worker relationships; Walmart makes plays on Amazon’s delivery fees
- Younger consumers fuel ecommerce and omnichannel growth
- Figure 31: Grocery shopping methods, by generation, 2023
- Meeting generational consumers where they are: personalizing the digital experience
- Figure 32: Select shopping methods by occasion, by generation, 2023
- Usage of online fulfillment methods is mixed
- Figure 33: Online grocery fulfillment method, by location, 2023
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Shopping by Category
- Shoppers still prefer the store in most categories
- Figure 34: Shopping for major categories – In-store versus online, 2023
- Opportunity to innovate the in-store experience in fresh, bakery and deli departments
- Beverages, non-perishable and frozen categories are top online performers
- Figure 35: Walmart sells viral Tik-Tok “Pink Sauce”
- Freshly prepared meals an opportunity for innovation
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- Figure 36: Any purchase of fresh prepared meals, by key demographics, 2023
- Millennials and parents widely adopt ecommerce across categories
- Figure 37: Online shopping for major categories, by generation, 2023
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- Figure 38: Shopping list app Cart Drop simplifies household shopping
- Shoppers still prefer the store in most categories
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Retailers Shopped
- Walmart continues to dominate grocery across channels
- Mass, discount and dollar chains grow share amid inflation
- Figure 39: Retailers shopped across channels, 2023
- Walmart, Amazon lead grocery ecommerce
- Room to grow omnichannel; mass retailers positioned to lead the way
- Figure 40: Select retailers shopped – Multichannel, 2023
- Figure 41: Target focuses on customer-driven, omnichannel expansions
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- Figure 42: Instacart, Walmart offer third-party omnichannel solutions to grocers
- Younger consumers diversify into other outlets, seniors stand by supermarkets and warehouse clubs
- Figure 43: Select retailers shopped, by generation, 2023
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- Figure 44: Online marketplace Consumerhaus targets the Gen Z experience
- Walmart continues to dominate grocery across channels
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Reasons for Preferred Grocery Retailer
- All facets of value matter, but most stay close to home
- Figure 45: Reasons for preferred grocery retailer, 2023
- Definition of value varies across generations
- Lower-income shoppers place everyday low prices ahead of deals and coupons and loyalty programs
- Figure 46: Reasons for preferred grocery retailer – Budget, by household income, 2023
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- Figure 47: Save A Lot heightens the focus on low prices and savings
- Cater to Asian American shoppers on value and freshness
- Figure 48: Reasons for preferred grocery retailer, Asian Americans versus all, 2023
- All facets of value matter, but most stay close to home
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Grocery Shopping Behaviors
- Most consumers live by their grocery list
- Opportunity to support consumers with meal planning
- Figure 49: Grocery shopping behaviors, 2023
- Younger consumers are breaking free from established routines; seniors set in their ways
- Figure 50: Select grocery shopping behaviors, by generation, 2023
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- Figure 51: Kroger discontinues paper circulars; Giant Eagle reinstates them
- Most consumers live by their grocery list
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Impact of Inflation on Grocery Shopping
- Consumers want grocers to take action on prices
- Figure 52: Attitudes toward grocery shopping – Prices, by household financial position, 2023
- In their own words: inflation at the grocery store
- High prices see consumers shift behaviors
- Figure 53: Impact of inflation on grocery shopping behaviors, by household financial situation, 2023
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- Figure 54: Grocery Dive highlights actions grocers are taking to support SNAP recipients
- Private labels key to supporting value-focused shoppers
- Figure 55: Behaviors and attitudes toward store brands, by key demographics, 2023
- Innovation is key to delivering on quality and premium store brand expectations
- Consumers want grocers to take action on prices
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Engagement with Loyalty Programs
- Loyalty programs don’t always translate to true shopper loyalty
- Figure 56: Reasons for preferred grocery retailer – loyalty program, by key demographics, 2023
- Step up the value proposition
- Figure 57: Interest in loyalty benefits, by household financial situation, 2023
- Motivate consumers with gamified rewards
- Ensure value at all tiers
- Figure 58: Albertson’s adds Apple Watch integration to its Sincerely Health platform; Kroger adds value tier to Boost membership
- Give consumers more flexibility and control
- Young consumers want to get more out of the loyalty experience
- Figure 59: Interest in loyalty benefits, by generation, 2023
- In their own words: consumers describe their experience with loyalty programs
- Loyalty programs don’t always translate to true shopper loyalty
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Attitudes toward Grocery Shopping
- Consumers enjoy grocery shopping
- Figure 60: Attitudes toward grocery shopping – Enjoyment, by age and gender, 2023
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- Figure 61: Albertson’s tests out the metaverse with its MetaMEga Deal
- Digital tools and personalization add to enjoyment, but older consumers are slow to adapt
- Figure 62: Attitudes toward grocery shopping – Digital and personalization, by generation, 2023
- Despite a focus on value, freshness and nutrition remain critical
- Figure 63: Attitudes toward grocery shopping – Freshness and nutrition, by household income, 2023
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- Figure 64: Schnuks opens second Eatwell Market store
- Consumers continue to shop their values
- Figure 65: Attitudes toward grocery shopping – Conscious consumerism, 2023
- Sustainability is a key area of focus
- Figure 66: Kroger’s AI-powered “Chefbot” tackles food waste
- Localism benefits consumers and grocers alike
- Figure 67: Giant Foods’ “Find Your Local” campaign
- Consumers enjoy grocery shopping
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Frustrations with Grocery Shopping
- Focus on resolving frustrations to evolve the shopping experience
- Figure 68: Frustrations with grocery shopping, 2023
- From checkout lines to deal-seeking: grocery shopping is a time-consuming task
- Figure 69: Wegmans scraps scan-and-go; Amazon extends checkout tech in Whole Foods Market locations
- Out of stocks continue to be a pain point
- Delivery fees and timelines remain a barrier in ecommerce
- Figure 70: Frustrations with online grocery delivery, by generation and household income, 2023
- Focus on resolving frustrations to evolve the shopping experience
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Evolving the Shopping Experience
- Consumers see opportunities to make the experience better
- Samples have near-universal appeal, regardless of shopping method
- Figure 71: Interest in shopping features – Samples, 2023
- Evolve the in-store shopping experience with compelling services
- Figure 72: Interest in in-store shopping features, 2023
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- Figure 73: Dom’s Kitchen & Market delivers on in-store services and local connection
- In-store experiential concepts can unlock new markets
- Figure 74: Interest in select in-store shopping features, by race and Hispanic Origin, 2023
- Evolving grocery ecommerce through speed, efficiency and personalization
- Figure 75: Interest in online shopping features, 2023
- Personalization and engagement essential in reaching younger consumers
- Figure 76: Interest in select online shopping features, by generation
- Consumers see opportunities to make the experience better
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Appendix – Data Sources and Abbreviations
- Data sources
- Sales data
- Forecast
- Consumer survey data
- Consumer qualitative research
- Abbreviations and terms
- Abbreviations
- Data sources
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Appendix – The Market
- Inflation-adjusted forecasts
- Multi-outlet
- Figure 77: Multi-outlet sales and forecast of groceries, at inflation-adjusted prices, 2017-27
- Figure 78: Supermarket sales and forecast of groceries, at inflation-adjusted prices, 2017-27
- Figure 79: Other multi-outlet sales and forecast of groceries, at inflation-adjusted prices, 2017-27
- eCommerce
- Figure 80: Total US online sales and forecast of groceries*, at inflation-adjusted prices, 2017-27
- Retail channels by category sales
- Multi-outlet
- Figure 81: Supermarket sales of groceries, by category, at current prices, 2017-22
- Figure 82: Other multi-outlet sales of groceries, by category, at current prices, 2017-22
- Figure 83: Multi-outlet sales of food and drink, by retail channel, at current prices, 2017-22
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- Figure 84: Multi-outlet sales sales of HBC, by retail channel, at current prices, 2017-22
- Figure 85: Multi-outlet sales of household, by retail channel, at current prices, 2017-22
- eCommerce
- Figure 86: Total US online sales of groceries*, by segment, at current prices, 2021 and 2022
- Figure 87: Total US online sales of food and beverages*, at current prices, 2017-22
- Figure 88: Total US online sales of health and beauty products, at current prices, 2017-22
- Inflation-adjusted forecasts
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Appendix – The Consumer
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- Figure 89: Year-over-year comparison of grocery shopping frequency, 2019-23
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- Figure 90: Year-over-year comparison of shopping methods, 2020-23
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- Figure 91: Year-over-year comparison, any online shopping (net), by generation, 2019-23
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- Figure 92: Category penetration, any purchase, percent point change compared to year ago, 2022-23
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- Figure 93: Retailers shopped online, rebased to online shoppers, 2023
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