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Walmart鈥檚 low prices and massive footprint give it an advantage in grocery. This year, Walmart Inc. will rake in $58.92 billion in US grocery ecommerce sales versus Target鈥檚 $8.10 billion, per our forecast. Meanwhile, Amazon鈥檚 massive array of products and speedy delivery time make it hard to compete with across multiple categories.

It's trying to get its grocery customers to move into non-grocery. I think in their most recent earnings call, they noted that almost half of their Walmart Plus members are coming from online pickup and delivery channels. So that's really one of the drivers of membership for them and a lot of that is grocery of course.

Over half (51%) of consumers said they were very likely to continue purchasing private label products should the price of groceries decrease, according to a March 2024 survey from FMI - The Food Industry Association. Retailers should continue to bulk up their private label offerings, emphasizing value and product assortment.

While Jassy pointed to grocery as a huge growth opportunity in his recent letter to shareholders, he also acknowledged the company is yet to find a mass grocery format worth expanding, despite significant investments in its Amazon Fresh banner.

Walmart鈥檚 clear value proposition drove shoppers across all income levels, helping it win share鈥攅specially in the grocery category, which it already dominated. And its Walmart+ membership service helped it retain those customers by offering online orders quickly delivered to their doors at no additional cost.

The stat: Over half (60%) of holiday season spend to-date was driven by five categories, according to Adobe Analytics鈥攅lectronics ($21.7 billion), apparel ($19.2 billion), furniture ($14.7 billion), grocery ($6.8 billion), and toys ($3.1 billion).

Getting its costs in check: Amazon has been on an ongoing push under CEO Andy Jassy to focus squarely on its core businesses鈥攍ike ecommerce, grocery, advertising, and AWS鈥攁nd aggressively cut costs wherever possible.

Food and beverage sales increased 0.8% MoM as grocery inflation remained in the double digits. The figures are largely in line with the trends major retailers like Costco and Walmart have noticed.

It's not a Canada-specific problem to see inflation affecting grocery store pricing, however, the report outlined a significant concern that three grocery giants were unfairly manipulating the market. Loblaw, Sobeys and Metro own the vast majority of grocery stores in the country, often under different guises.

Nearly half (45.7%) of all US pet products sales will be made online by 2025, the highest ecommerce penetration of all grocery products. In 2020, the number was only 31.0%. Retailers are leaning into that desire by offering subscription programs, which, in addition to streamlining the shopping journey, help to increase repeat engagement among customers. 3. But online behaviors are changing.

With conversions growing increasingly omnichannel, categories that are traditionally offline, such as grocery, need to invest in ecommerce, while mature digital categories, such as apparel, can鈥檛 neglect the need for consumers to try items on in-person. 2. Digital touchpoints鈥攅specially search鈥攁re 鈥榓lmost a guarantee鈥�.

The drawbacks: On the flip side, the shift in spending from high-margin discretionary categories like apparel and home decor to low-margin groceries has hurt gross profits, leading discount retailers to invest in private labels and higher-priced store concepts, and in some cases temporarily stop stocking certain items.

Walmart, which generates over half of its US revenues from groceries, has grown its grocery market share thanks to its ability to attract more affluent shoppers. Target, on the other hand, generates a larger share of revenues from discretionary purchases such as home goods and electronics, which are categories where consumers have pulled back.

Both Walmart and Dollar General have observed an influx of higher-income shoppers as prices (specifically in the grocery/consumer packaged goods category) remain high. Mall staples like Macy鈥檚 are struggling as consumers pull back their discretionary spending. There鈥檚 a lot of empty real estate.

When the cost of groceries and other essentials are eating up a bigger share of consumers鈥� wallets, they cut back on expenditures like dining out and entertainment, our analyst Blake Droesch said. Weekly visits to dining chains nationwide trended downward YoY throughout 2023, per a February 2024 report by Placer.ai. AI to the rescue?

Even apparel, footwear, and accessories, the biggest ecommerce sales category, is expected to lose ground to grocery when combining food and beverage with personal care, cleaning, pet, and baby products. Digital transformation: Health, personal care, and beauty will undergo the biggest digital shift among categories. By 2028, 29.5% of its sales will come from ecommerce, up from 20.1% in 2024.

Why restaurant sales are rising: While food prices have soared throughout the past year, prices have risen at a slower rate at restaurants (8.2% YoY in January) than at grocery stores (11.3% YoY in January), per the US Labor Department.

Walmart has made headlines for higher-income shoppers trading down on groceries. Another strong area is the Walmart+ program, which has grown among younger shoppers who may have less spending power. As of December 2022, 23% of respondents to an Insider Intelligence survey conducted by Bizrate Insights said they subscribed to Walmart+, up from 11% in June.

At the same time, more shoppers are using the service to purchase essentials like groceries, whose share of BNPL spending has risen by 37.5% this year. Overall, BNPL users spent $46.7 billion so far in 2023, a 14.7% increase YoY.

In January, Douyin delved deeper into the grocery business by launching an in-app supermarket. These moves have intensified the competition between Douyin and local services platforms Meituan, Ele.me, and Freshippo, the latter two owned by Alibaba. Some newer product categories are growing briskly on Douyin.

UK consumers are more attached to supermarkets than to brands in most other categories. In part, that reflects the sector鈥檚 leadership in the loyalty space: 90% of UK loyalty users are signed up to a supermarket program, versus 29% for clothing and shoes and 22% for cosmetics, per a November 2022 survey by Software Advice. UK consumers are already turning to loyalty programs to save money.

Offering Walmart+ memberships to eligible CareSource members creates an incentive to spend money in the store鈥攅ven on groceries. Go deeper with The Power of Walmart: How 12 Walmart Businesses Drive the Big-Box Retailer鈥檚 Growth. Check out our US Retail Clinic Patients forecast.

Walmart US grew its private label penetration within grocery by 110 basis points in Q1 2024 (the 13-week period ended April 28, 2023). Walmart Canada also grew its private label sales by 7% YoY.

So it's like a one trip wonder kind of activity versus Aldi only has that groceries. All they have is groceries. The one thing I think is very cool is that they've turned grocery shopping into a fun activity with this aisle of shame.

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