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While rising stock and housing prices and higher investment income is helping to boost affluent consumers鈥� optimism and fuel spending, other income cohorts are feeling the pinch of higher grocery and housing prices, driving them to seek value wherever possible.

Tesco and Sainsbury鈥檚 online sales plummeted in 2022 as the digital grocery market normalized from its pandemic-related peak and shoppers returned to physical stores. However, online sales at the two retailers have bounced back and will grow by around 5% in 2024, per our forecast. Tesco鈥檚 online sales are growing faster than before the pandemic.

The data point: Roughly three quarters (72%) of consumers say the economy has directly impacted their grocery shopping habits, per a new Ibotta report. Roughly the same share, 75%, would try a different brand if it was offered at a lower price than what they usually purchase. Nearly two-thirds of consumers, 64%, said price is more important than a brand name.

Drugstores and supermarkets also underperform with Gen Z and millennials online. Boots is still the UK鈥檚 leading beauty retailer overall. However, drug generalists such as Boots and rival Superdrug don鈥檛 have the same share of online spend among Gen Z and millennials as they do with older generations, per NIQ. The same is true of brick-and-mortar generalists, such as Tesco.

Grocery is the last holdout, but there鈥檚 still a strong online conversion rate in these categories. Stores lead in conversion for shoppers buying new brands and products across food and beverage, household supplies, and health and personal care.

Click and Collect Will Drive Digital Grocery Growth. Click and collect鈥檚 explosive pandemic-era growth has tailed off, but for groceries the outlook is brighter. Grocery click-and-collect sales increased by 16.3% last year and will grow by 15.1% this year. These figures solidly outpace the metrics for overall click-and-collect growth.

Amazon鈥檚 inability to take full advantage in the grocery space gives Walmart and other digital grocery players a chance to gain ecommerce market share in the category. It will remain difficult for competing retailers to capitalize on Amazon鈥檚 stagnant overall ecommerce market share. Outside of food and beverage, the only other maturing ecommerce category where Amazon is missing out is auto and parts.

Much of its success has come from its rapidly growing digital grocery business, which accounts for more than 62% of its ecommerce sales in 2023. Digital grocery is one area where Walmart is actually beating Amazon. This year, Walmart will capture more than 28% of the US digital grocery market鈥攎aking it the leading player in the industry鈥攃ompared with just 22% for Amazon.

By the end of 2024, Looma plans to expand its network from 800 to over 5,000 screens, including more categories within grocery stores, particularly the adult beverage section. Looma鈥檚 platform will include a mix of high-value space screens, alongside two new screen types: in-aisle interactives and atmospheric screens.

After closing locations last year, Amazon opened several new Fresh supermarkets in September. 鈥淕谤辞肠别谤测 in person is not something that Amazon's been able to get right,鈥� said our analyst Sara Lebow. 鈥淚鈥檓 fascinated to see if it actually works this time.鈥�. Amazon also quietly added ads to Rufus. 鈥淕en AI and chatbots is just not a space that we've seen ads yet,鈥� said Stambor.

In the past year, it has shuttered its tech-forward Amazon Style clothing stores and struggled to find the right format for Amazon Fresh grocery stores. Amazon can鈥檛 make shopping fun. Despite Amazon鈥檚 massive customer base, our research shows that shoppers are still more likely to discover new brands and products when shopping in stores. Amazon can鈥檛 meet the customer everywhere.

The grocery question: While Amazon鈥檚 earnings release highlighted the company鈥檚 achievements in ecommerce, AWS, advertising, generative AI, and even its B2B business, it stayed mum on grocery鈥攁n indication that the company is struggling to figure out a path forward in that highly competitive sector.

Members can purchase their food prescriptions with Instacart鈥檚 grocery stipends for health food (Health Fresh Funds) from local grocers on Instacart. The Fresh Funds stipend is funded by employers and health plans that work with 9amHealth.

Golden Ratio (gold coffee) and Umamicart (Asian groceries) both saw site visits grow 258% YoY to rank within the top five, while Drink Trip (CBD-infused beverages) ranked 11th. Health and nutrition products are also gaining D2C momentum.

The big takeaway: Building a technology-focused supermarket chain from scratch is a capital-intensive endeavor that no longer makes sense for the newly penny-pinching Amazon. That said, embarking on an ambitious expansion strategy for its high-end grocery chain is puzzling given grocery inflation is shifting consumers鈥� buying habits.

The core Amazon website drives the most grocery traffic, but integration is coming. Nearly half (49.5%) of US digital grocery buyers made a grocery purchase from Amazon.com in the last 12 months, per our May 2023 survey. That鈥檚 a far greater percentage than Amazon Fresh (18.6%) and Whole Foods (7.3%).

Digital grocery will see the most growth through 2027. In our forecast, digital grocery comprises two categories鈥攆ood and beverage and health and personal care鈥攂oth of which will grow by more than 14% annually through the end of 2027. Their gains will be fueled by the increased availability and use of fulfillment options like click and collect and same-day delivery.

Grocery is gaining share of online sales in France and Germany. Grocery defied the wider slump in ecommerce in France and Germany last year, with online sales growing by around 1% in both countries. This year, growth is set to accelerate in both countries, driven by double-digit price inflation. Grocery is outperforming other online categories in France and Germany.

Vague moralizing about BNPL, like The Motley Fool Ascent鈥檚 advice to 鈥渏ust say no to BNPL鈥攗nless you really have no choice,鈥� or disparaging using BNPL for groceries as the 鈥渉eight of personal desperation,鈥� may be keeping consumers away.

We expect Uber Eats鈥� restaurant sales to grow 10.8% this year, while grocery sales will rise even faster at 14.8%. DoorDash, meanwhile, will see its share of grocery delivery intermediary sales rise to 12.6% this year, in addition to accounting for over half the restaurant delivery market. Go further: Check out our Data Drop: 5 Charts on Digital Dining Habits.

Compare ad spend across grocery delivery brands. More like this:. Amazon tests Prime grocery subscription as it tries to win back market share. Grocery, in-store pickup drive click-and-collect growth. The top 6 holiday ecommerce retailers this year. Lessons from Walmart, Coca-Cola on what makes an engaging holiday ad.

While both those companies primarily provide restaurant delivery, they are rapidly growing their grocery businesses. For example, our forecast expects DoorDash to make $5.26 billion in online grocery sales this year, which is over nine times the $580 million it generated in 2020.

鈥淭here has been a little bit of a pullback, particularly around grocery delivery over the last couple of months, and I do think that that is a result of persistent inflation, particularly for the price of groceries online,鈥� said our analyst Blake Droesch. In fact, 2023 US grocery ecommerce sales grew at 18.4% compared with the 17.4% we forecast for 2024.

Grocery TV reaches new milestone. Grocery TV has grown its footprint 26% YoY, operating 20,000 marketing displays across 4,000 grocery stores. The 鈥嬧�媔n-store digital advertising company has worked with brands such as AT&T, The Hershey Co., PepsiCo, and JPMorgan Chase, and developed partnerships with grocers like Schnucks, Smart & Final, and Coborn鈥檚.

Looking ahead: We expect Instacart鈥檚 grocery sales to climb 12.8% this year to $39.07 billion, although its grip on grocery delivery is slowly loosening thanks to growing competition from DoorDash, Uber, and grocers themselves. The company鈥檚 share of grocery delivery intermediary sales will fall to 69.9% this year, while DoorDash鈥檚 share will tick up to 12.6%.