Consumer preference for online shopping to propel adoption

The U.S. online grocery retail market size is expected to reach USD 26.87 billion by 2025. The growth of the market is attributed to increasing adoption of advanced technology, access to high-speed Internet, and easy online availability of various products. Rising number of online grocery shoppers is expected to further drive market expansion. For instance, the number of American households buying online grocery products has increased by about 14% from 2014.

Millennials constitute the largest consumer group in the U.S. population and they form the largest working population group in the country. Hence, they prefer convenient shopping options when it comes to the grocery. This factor is driving the growth of the online grocery retailing market in U.S. Moreover, most millennials are tech-savvy and prefer online grocery shopping as it provides them with hassle-free checkout and payment services. Weekly discounts and offers are luring millennials into spending online. Thus, the digitally advanced generation is anticipated to augment the market in future.

Innovative packaging and marketing strategies are attracting millennials to spend more on online grocery products in U.S. Durable packaging is a necessity for the robust supply chain. However, retailers are coupling durability with design to attract a large customer base. For instance, meat packaging is made available in various innovative containers. As a result, the availability of advanced packaging solutions is likely to drive growth.

Organic and natural foods are gaining popularity among consumers. Hence, retailers are focusing on product lines to fulfill the changing needs of health-conscious consumers. For instance, Amazon includes organic products such as Marconda’s Meats and Genetically Modified Organism (GMO)-free New York steak in its grocery product portfolio. Promotion of local produce has gained momentum in the past few years and is expected to drive the food products segment. Retailers are offering locally-made products like dairy, meat, poultry and fish products, organic vegetables, fruits, and pickles. For instance, Peapod has collaborated with Farmlogix, an Evanston-based company, to source produce from 12 Midwest farms for its customers. Non-food items like basic home products and pet care products are also popular among consumers. Demand for non-food products is expected to contribute significantly to the growth of online grocery retailing market.

Various well-established players in the U.S. online grocery retail industry include Peapod, Amazon, and Walmart. Amazon is a leading player with its popular subsidiary AmazonFresh, followed by Peapod. Most retailers in this market are opting for mergers and acquisitions (M&A) as a key growth strategy. For instance, Amazon acquired Whole Foods to expand its product portfolio and presence in the U.S. market. Moreover, innovative concepts such as personal shoppers and Amazon Go stores are being introduced in the market for hassle-free payments and checkouts. Revolutionary online shopping experiences with minimum cost are expected to result in industry growth.

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Hexa Research has segmented the U.S. online grocery retail market report based on product type

Segmentation by product type, 2015 - 2025 (USD Billion)
    • Food Products
    • Non-Food Products

Key players analyzed:
    • Amazon.Com, Inc.
    • Peapod, LLC
    • Walmart
    • The Kroger Co.
    • Fresh Direct, LLC.