Between brick-and-mortar stores, retailer websites, apps and delivery platforms, it’s safe to say consumers are saturated with shopping options – but it’s online grocery that’s driving growth within the category, according to recent data from FMI – The Food Industry Association and Nielsen IQ.
Approximately 94% of consumers shop across online and in-store channels which make up total grocery spending, trips and units, per the report. Yet the share of shoppers relying either on in-store or online grocery continue to decline.
This shift from individual channels to omni is shown in sales projections with online grocery sales projected to increase much faster than overall grocery sales, according to Nielsen data.
From 2026 to 2028, online grocery is estimated to grow at an 11.6% compound annual growth rate (CAGR), compared with 0.6% for in-store sales. As a result, online’s share of total grocery spending is projected to rise from 18% in 2024 to 25.5% by 2028, reaching roughly $452 billion in sales, according to Nielsen data.
Online grocery’s faster growth also contributes to the most net new dollars entering the category, according to FMI. For example, last year, e-commerce grocery made up roughly three-quarters of total grocery dollar growth. Although e-commerce baskets are typically smaller and purchase habits are more mission-driven than in-store trips, the rate of online shopping continues to grow, expanding the overall category, per FMI.
Beverages, meat, coffee and prepared food drive online sales
Although growth varies by category, ecommerce is capturing a growing share of total grocery spend, according to FMI. Food purchases remain primarily store-led – especially compared to categories such as health and beauty, baby care and pet care, which have the highest ecommerce penetration.
Within food, beverages, meat, coffee and prepared foods make up a significant portion of online sales with the top 20 food categories accounting for more than 80% of online food revenue.
Fulfillment is changing to accommodate e-commerce volume
The digital shift impacts fulfillment infrastructure, FMI said. The majority of online grocery fulfillment comes from shipped and delivered orders, making up about 80% of e-commerce volume. Delivery speeds continue to improve as average order-to-delivery times fell by roughly half since 2018. Grocery pickup remains relevant for shoppers as an option that allows for speed, cost and control – especially for fresh foods.
Higher education households and those earning $100,000 or more annually are significantly driving online grocery spend, FMI said.
How are different demographics shopping online?
Generational differences also shape product discovery and purchase online with Gen Z leading adoption from social media platforms like TikTok Shop. But, retailer apps are still important for this demographic, who use these platforms for planned grocery shopping.
Millennials rely on omnichannel depending on their needs but they are more likely to use digital options for planned and family grocery shopping.
Gen X shoppers but use omnichannel options for weekly ads, coupons and loyalty programs on retailer apps.
While Boomer shoppers prefer in-store, they increasingly use retailer websites and apps and use pickup and delivery for convenience.
Retail media continues to drive purchases
Across the industry, retailers and brands are responding by prioritizing ecommerce capabilities, loyalty platforms, digital media and technology investments designed to support online shopping at scale.
Retail media networks (RMNs) are increasingly part of how retailers and suppliers are prioritizing ecommerce capabilities, loyalty platforms, digital media and technology investments to support online shopping at scale, FMI said. More than a third (38%) of food retailers and 71% of brands actively use retail media networks, which serve as a key point of discovery and engagement on retailer websites and apps.
While RMNs experienced a gold rush of activity over the last several years, recent data points to marketers streamlining their budgets towards lower-cost, higher efficiency channels that deliver on performance.
