The Supply Side: Online grocery sales could grow 8.9% annually through 2029

As grocery spending growth is expected to slow through 2029, Brick Meets Click reports that changes in government assistance, immigration, and inflation could significantly impact shopping behaviors. Online grocery is expected to outpace in-store sales growth.

U.S. online grocery is expected to grow at a compounded annual rate of 8.9% through 2029, more than five times faster than the 1.7% growth rate expected for in-store grocery sales, the report noted. The report also indicated that 2024 annual e-grocery sales rose 9% over 2023, driven by membership promotions from Walmart and Instacart in the second half of the year, which offset flat results in the first half.

The surge in online sales has continued into 2025. As a result, the online segment is expected to post similar relative gains for 2025, with orders using delivery continuing to drive most of the year-over-year growth. Through the first four months of 2025, online grocery sales totaled $39.8 billion, up 22.23% from the same period last year. The online grocery segment added $7.24 billion in sales in the year-over-year period.

Brick Meets Click noted that with online grocery sales expected to grow 5.2 times faster than in-store sales, e-grocery will account for nearly half of the grocery market’s total dollar growth over the next five years. The marketing firm forecasts that online grocery will contribute almost 40% of the sales gains in 2025 and more than half of the gains by 2029.

“As firms, especially grocers, review our new five-year forecast it’s important to keep in mind that mass retail and Walmart (excluding Sam’s Club) now account for nearly 50% and 40% of today’s e-grocery sales, respectively, and that the top line 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.”

IMMIGRATION HIT
Bishop said the adoption of a more restrictive immigration policy by the Trump administration is one factor contributing to the forecasted slowdown in sales growth.

Immigration slowed during President Donald Trump’s first term by 9% for the first three years, ahead of the pandemic. Applying a similar rate through 2028, Bishop expects slower immigration will result in a 0.54% drag on the five-year e-grocery sales growth rate.

The report also expects that tariffs and changes in trade policy could create shifts in buying behaviors due to higher prices. While political uncertainty makes it difficult to predict how tariffs will impact the grocery market, the forecast calls for grocery-related inflation to run between 2.7% and 1.2% through 2029. The forecast includes food at home, housekeeping supplies, pet products, personal care products, alcoholic beverages at home, and tobacco and smoking products.

“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,” Bishop said. “Before the pandemic, e-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.”

Pending legislation linked to supplemental nutrition assistance programs (SNAP) at the federal and state levels is a “gray swan” that could impact growth rates for grocery sales in-store and online, according to the report. The proposed changes threaten to reduce payments, make it harder for people to qualify for assistance, and/or restrict the types of products eligible under the programs, Bishop said.

Approximately 22 million, or 17%, of all U.S. households receive SNAP benefits as of January 2025, so reductions will likely trigger further changes in what, where and how much is purchased.

SNAP SCORECARD
A separate SNAP report by Numerator found that through April 2025, 3.7% of U.S. grocery trips used SNAP or WIC (Women, Infants and Children) benefits, down from 4.6% last year.

Numerator reports shoppers spent $32.88 on average, purchasing 8.9 items during the first four months of 2025. Average spending was down from $32.92 for 9.2 items in the same period of 2024.

The states with the largest percentage of in-store grocery trips that used SNAP or WIC benefits in 2025 are New Mexico (7.2%), California (6.6%), and Massachusetts (6.6%). The Pacific region of the U.S. has consistently shown the highest rates of SNAP and WIC benefit usage, with 6.3% of the region’s in-store grocery trips. The West South Central and West North Central divisions saw the steepest drop in SNAP trips, down 24% and 26%, respectively.

Walmart remains the dominant grocery destination, capturing 25.8% of overall SNAP household grocery spend. Numerator reports that 94.2% of SNAP shoppers purchased groceries at Walmart in the past year, spending an average of $2,531.

Kroger garners 8.6% of the total SNAP household spend, with 49.5% of its shoppers using SNAP benefits that totaled an average annual spend of $1,615.

Dollar Tree targets SNAP households, with 78.8% of its shoppers using the benefits with an annual average spend of $191. Dollar General also indexes high, with half of its shoppers using SNAP benefits for an average annual spend of $378.

Editor’s note: The Supply Side section of Talk Business & Politics focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by Talk Business & Politics, and is sponsored by HRG.