Online Grocery Outpacing Covid Levels

I want to start by thanking Brick meets Click and Mercatus for providing us with the topline numbers from their ongoing Online Grocery tracker. Besides the data, they have great content and insights on YouTube and their websites. To go beyond my cursory analysis, give them a visit https://www.brickmeetsclick.com/

Online Grocery spend had been trending down since Covid but started to pick up last year. Comparing 2025 Q1 to previous Q1's, Online Grocery has surpassed those Covid levels and by a sizable amount.

Looking at YOY sales below, we can see things really started to shift last summer with penetration increasing from about 10% to about 13% today. It was almost a step increase with penetration trending in the 10% to 11% range and now in the 13% to 14% range. Being that grocery is such a large market, each percentage point increase in share is worth about $760M. Thus this 3% shift in penetration is about a $2B gain in just about a year. In other words, we are seeing $2B incremental sales lift in Online Grocery in just one year. What is driving this rapid change?

Walmart delivery is what is driving much of this incremental gain. Brick Meets Click (BMC) calls them out as the key driver. This can be seen in the chart below. The run up in Delivery coincides with the run up in overall Online Grocery sales. According to BMC it is the free delivery and discounts being offered that are driving much of this increase. See Mercatus' latest post for more details https://www.mercatus.com/newsroom/march-2025-egrocery-sales-jump-21-versus-year-ago-to-9-7-billion/

What does this mean for the grocery industry? First, Walmart is tearing it up. They are increasingly putting the Online Grocery screws to supermarkets and even Amazon to some degree. The alchemy that is the Walmart digital program is hitting on all cylinders. This includes not only the online grocery sales, but also retail media which is amplified by analytics and personalization. This hulking retailer has found a way to be innovative and agile while also selling hundreds of billions of dollars in groceries. They are pushing the boundaries and are a nice window into the future of grocery.