The grocery retail industry has hit a turning point it won't walk back. What used to look like a gradual shift toward online shopping has turned into a structural change in where grocery dollars actually go, and the numbers now back that up in ways that are hard to argue with. This isn't a seasonal blip or a pandemic hangover; it's a permanent redrawing of how shoppers choose to buy their groceries, and it's happening faster than most retailers planned for.

In January, we published two analyses of where the grocery retail industry was heading this year. The first identified five shopper shifts set to define the year, from the rise of ultra-fast delivery to changing basket sizes. The second drew four lessons from the prior year's sales data, looking closely at order frequency, channel mix, and where profit was concentrating. Both pieces were built on a full twelve months of numbers and what looked, at the time, like early signals of acceleration heading into a new year. We weren't guessing; we were reading the data as it existed then and projecting forward.

Six months later, the question isn't whether those calls held up; it's how much the timeline has compressed. According to Brick Meets Click's ongoing grocery shopper survey, online grocery has sustained 20 percent or higher year-over-year growth for six straight quarters, a run that's now long enough to call a trend rather than a spike. FMI and NielsenIQ now project online grocery sales will reach $452 billion by 2028, and without ecommerce, plenty of grocery categories would already be posting flat or declining sales. In other words, digital isn't supplementing growth anymore; in a lot of categories it's the only thing generating it.

The trends we flagged didn't just continue; they outran the forecast, and they now represent a new baseline for the entire grocery retail industry. Grocers who built plans around gradual, single-digit online growth are now working off assumptions that are already out of date. That's what this piece unpacks, section by section, starting with what the first half of the year actually looked like in the numbers, and what it means for how regional grocers should be thinking about the back half of the year.

Online Grocery's Share of Total Spending Is Accelerating

Six months ago, online's slice of grocery spending was hovering under 15%. That's not the case anymore. According to Brick Meets Click's data, online's share of total grocery spending has climbed from less than 15% at the end of the third quarter of 2024 to more than 19% in the first quarter of this year. That's not a rounding error; it's a meaningful reshuffling of where grocery dollars land.

The dollar growth numbers make the shift even clearer. FMI and NielsenIQ report that online sales accounted for roughly 72% of total grocery dollar growth in 2025. In other words, almost three-quarters of the new revenue entering the grocery retail industry last year didn't come from the register; it came from a screen. In-store sales, by comparison, are expected to grow at a compound annual rate of less than 1% through 2028, which is close to flat once you factor in inflation.

That gap between 72% and sub-1% growth isn't just a statistic; it's a signal about where attention and investment should be going. It's the difference between where grocery revenue is flowing and where a lot of grocers are still pouring most of their operational focus.

Why Delivery Speed Has Become the Industry's Defining Competitive Pressure

Delivery speed used to be a perk. Now it's the price of entry. Same-day arrival is the norm for most delivery orders in the grocery retail industry today. Sub-hour fulfillment, once a rare add-on, now makes up a real share of both delivery and ship-to-home volume. That shift happened fast, and it's put pressure on grocers who built their fulfillment plans around next-day or two-day windows.

Fulfillment speed isn't a back-of-house decision anymore. It's become a behavioral lever that shapes where shoppers choose to spend, and the grocery retail industry now has to treat it that way. Grocers who still view delivery speed as an operational afterthought are competing against companies that treat it as a core part of the shopping experience.

The Amazon and Walmart Threat

Amazon and Walmart are driving most of this pressure. Both companies compete on price, but speed has become their sharper weapon against traditional grocers. Their scale lets them build fulfillment networks that smaller and regional players can't easily match.

Amazon's 30-minute Prime delivery

Amazon's 30-minute delivery service for Prime members already runs in several major markets. The company plans to expand that service to dozens more markets by the end of the year.

Walmart's population coverage

Walmart's sub-30-minute delivery service now reaches roughly 60% of the U.S. population. That reach makes Walmart one of the widest fast-delivery footprints in the country right now.

Walmart's store network as distribution infrastructure

Walmart's stores don't just serve walk-in shoppers anymore. The same locations double as distribution hubs that power its online grocery orders, which cuts down on the distance and time needed to get an order to a shopper's door.

Both companies have used this infrastructure to disrupt how shoppers think about grocery delivery. A shopper who gets used to a 30-minute window from Amazon or Walmart starts expecting that same speed everywhere else. That expectation doesn't stay contained to one retailer; it spreads across the whole category.

Building a Profitable Pickup Program Without Chasing Sub-Hour Delivery

Regional grocers can't win a speed race against Amazon and Walmart. Both companies have the scale, the store density, and the logistics budget to make sub-hour delivery a baseline offer. Chasing that same benchmark means spending margin a regional grocer doesn't have to spare. The better path isn't matching that speed; it's building a pickup program that competes on convenience without burning cash on infrastructure most shoppers don't need.

What Smarter Fulfillment Looks Like Instead

Smarter fulfillment means competing on perceived convenience rather than raw speed. That comes down to fixing the specific friction points that make a shopper hesitate before checkout, not shaving minutes off a delivery window.

Fees that feel unclear or unfair

A shopper who can't tell what a delivery or pickup will cost until the final checkout screen is more likely to abandon the order. Clear, upfront pricing removes that hesitation before it starts.

Lead times that feel too long

Shoppers don't always need their order in 30 minutes, but they do need to know exactly when it'll arrive. A reliable two-hour window beats a vague same-day promise every time.

Checkout uncertainty

Shoppers get frustrated when they don't know if an item will be substituted or left out of their order. Giving them control over substitution preferences closes that gap without any extra fulfillment cost.

Targeted offers can close these gaps without the overhead of a full-speed buildout. A grocer that fixes fees, lead times, and checkout uncertainty gives shoppers a reason to stick with pickup, even without matching a mass retailer's delivery window. That's the version of fulfillment a regional grocer in the grocery retail industry can actually afford to run at scale.

Digital Customer Engagement Is What Separates Growth From Margin Erosion

More orders don't automatically mean more profit. That's the trap a lot of grocers are falling into right now. As order volume climbs, so do labor, picking complexity, and pressure on staging infrastructure. Whether that growth turns into margin gain or margin loss depends on one thing: what a grocer does with the order data once it exists.

Two paths after the first order

Every new online order generates data about who placed it, what they bought, and how they shopped. Some grocers treat that data as a record of a single transaction and nothing more. Others treat it as the start of a relationship they can shape with the next offer, the next reminder, or the next personalized recommendation.

Grocers treating every order as isolated

A grocer that ignores order data after checkout is spending the same acquisition cost on every single order. Each new order carries the same friction and the same fulfillment expense with no discount from familiarity or repeat behavior. Over time, that approach raises the average cost of every sale instead of lowering it.

Grocers connecting order data to engagement

A grocer that builds digital customer engagement into its operations turns each order into information it can act on. That might mean a follow-up offer based on what a shopper usually buys, or a reminder timed to when they typically reorder. The cost of earning that next order drops because the grocer already knows what the shopper wants.

This matters more as the grocery retail industry keeps shifting online. Order volume is rising across the board, and every grocer is facing the same labor and fulfillment pressure that comes with it. The ones building real digital customer engagement into their operations are the ones turning that pressure into growth instead of into shrinking margins.

How Mercatus DXPro Supports the Grocery Retail Industry's Shifts

DXPro tracks shopper behavior across every channel and fulfillment method a grocer offers, so a change in one place shows up right away instead of surfacing weeks later in a report. When a shopper's order frequency drops, when their basket composition shifts, or when checkout friction threatens to cost a sale, DXPro flags it in time to act. That speed matters in a grocery retail industry where margin depends on catching these moments before a shopper drifts to a competitor. The platform turns raw order data into a win-back offer for a customer who's pulling away, a retention nudge for one whose value is trending down, or a targeted incentive delivered at the exact moment it can change the outcome.

The grocery retail industry isn't slowing down its shift toward digital customer engagement, and grocers that keep treating online as a side channel will keep losing ground to the ones running it as the core of their business. Talk to our team today and see how DXPro can help your business respond to what's changing in online grocery retail.

Frequently Asked Questions

What is the grocery retail industry and what does it include?

The grocery retail industry covers the sale of food and household essentials to consumers through physical stores, online platforms, and pickup or delivery services. It includes supermarkets, hypermarkets, discount grocers, convenience stores, warehouse clubs, and online only grocers. The category spans fresh departments like produce and meat, center store packaged goods, and services like pharmacy and fuel.

How big is the grocery retail market?

The U.S. grocery sector is on track to exceed $1.1 trillion in spending this year, and FMI and NielsenIQ project online grocery sales alone will reach $452 billion by 2028. Globally, the grocery retail industry sits in the multi-trillion-dollar range, driven by steady population growth and rising demand for food at home.

What are the biggest challenges facing grocers right now?

Grocers are dealing with thin margins, rising labor and fulfillment costs, and shoppers who've grown more price-sensitive since inflation took hold. On top of that, smaller online basket sizes are compressing per-order profit even as order volume climbs. Competing with mass retailers on delivery speed adds another layer of pressure that many regional grocers can't afford to match.

Who are the biggest grocery retailers by market share?

Walmart leads U.S. grocery sales by a wide margin, followed by Kroger, Costco, and Albertsons. These national and mass retail players carry enough scale to invest heavily in private label, fulfillment infrastructure, and fast delivery, which puts pressure on regional and independent grocers competing in the same grocery retail industry.

How is e-commerce changing the grocery retail industry?

E-commerce now drives most of the new revenue entering the grocery retail industry, with online sales accounting for roughly 72% of total grocery dollar growth in 2025. Shoppers are ordering more often but in smaller baskets, and fast delivery has shifted from a nice-to-have into a baseline expectation. Grocers that connect online order data to personalized engagement are seeing better retention than those still treating every order as a one-off transaction.