Report: Online grocery sales slated to outpace in-store growth
Online grocery sales have been on a hot streak in recent years – with no signs of cooling down.
A new forecast from Brick Meets Click reveals that the online segment is projected to increase at a compound annual growth rate (CAGR) of 8.9% over the next five years. This figure is more than five-times faster than the 1.7% rate expected for the in-store grocery segment.
Brick Meets Click projects that online grocery sales, which includes pickup, delivery and ship-to-home, will account for 17% of all grocery sales in the U.S. by the end of 2029. The sector will account for nearly half of the grocery market’s total absolute dollar growth over the next five years with in-store driving the rest, while contributing nearly 40% of the gains in 2025 and more than 50% of the gains in 2029.
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In 2024, annual online grocery sales finished just over 9% higher than 2023, which Brick Meets Click says was driven by promotion-fueled year-over-year growth in the high teens during the second half of the year, offsetting the absence of growth during the first six months. The surge in online sales has continued into this year, and as a result, the online segment is expected to post similar relative gains for 2025, with delivery continuing to drive most of the annual growth.
“As firms, especially grocers, review our new five-year forecast, it’s important to keep in mind that mass retailers and Walmart (excluding Sam’s Club) now account for nearly 50% and 40% of today’s online grocery sales, respectively, and that the topline view includes ship-to-home, a service that most grocers don’t offer,” said David Bishop, partner at Brick Meets Click. “Given these factors, we encourage firms to leverage this national forecast as a guide for examining their regional trade areas in terms of competitive set, household demographics and growth opportunities.”
Determining factors
Brick Meets Click also noted that several political changes will play a factor in online grocery growth. The adoption of a more restrictive immigration policy by the Trump administration is one factor contributing to the forecasted slowdown in sales growth. Brick Meets Click noted that the administration employed a similar approach during its first term, which caused immigration to decrease at a CAGR of 9% for the first three years, excluding 2020 due to COVID-19. Applying a similar rate through 2028 results in a 54-basis point (bps) drag on the five-year online grocery sales CAGR.
Tariffs will also be a key determining factor. While it is “very difficult” to predict how tariffs will impact the grocery market, Brick Meets Click says its forecast calls for grocery-related inflation to run between 2.7% and 1.2% through 2029. This encompasses food at home, housekeeping supplies, pet products, personal care products, alcoholic beverages at home, and tobacco and smoking products.
Finally, pending legislation linked to supplemental nutrition assistance programs (SNAP) at the federal and state levels could impact growth rates for grocery sales both in-store and online. Brick Meets Clicks says that as the proposed changes threaten to reduce payments overall, make it harder for people to qualify for assistance, and/or restrict the types of products eligible under the programs, sales could suffer. Approximately 22 million, or 17%, of all U.S. households receive SNAP benefits as of January 2025.
“Grocery retail has always been a dynamic business, but the rate of change over the last five plus years has disrupted shopping patterns, especially for delivery and value formats, like Walmart, and that disruption is not disappearing anytime soon,” said Bishop. “Before the pandemic, online grocery’s draw was largely about saving time, during the pandemic it was about protecting your health, and today it’s often more about saving money and time.”
