Buoyant Grocery Spend Sharpens Online, Offline Battle Lines Between Walmart and Amazon

The latest official data from the United States government gives a nod to the fact that U.S. consumer spending on grocery products remains buoyant.

The resilience will likely give new impetus for Amazon and Walmart to reinforce their efforts to capture more mindshare and wallet share as individuals and households look to stock up on edible essentials and splurges, online and offline.

Earlier in the week, the Consumer Price Index from the U.S. Bureau of Labor Statistics detailed that prices rose 0.6% in August, as measured month over month. The Index shows that eating food at home (groceries) was 0.2% more expensive in August and has risen 3% in the last year. Separately, Thursday’s latest retail sales release depicts a solid bump in August’s spending on food consumed at home.

Earnings season commentary and second-quarter data, along with PYMNTS’ Intelligence research, show how crystallized the battle lines are in the grocery segment. Walmart remains the dominant player here, as we estimate that in 2023’s Q2, Walmart’s share in food and beverage sales reached 19.3%. That is a steady state, relatively, in terms of market share, and is leagues ahead of Amazon’s 2.6% share, though the most recent tally is 0.3% higher than the same quarter last year.

In part, Walmart’s grocery share is higher because grocery-related transactions tend to be done on-site. For in-person commerce, Amazon still lags Walmart’s share of this market, even though Amazon’s physical stores’ revenue increased by 6.4% in Q2 2023, as measured year over year. The inroads that Amazon has made, as noted above, may see some cross-channel support in the mid and longer term, as Amazon recently announced that it will be adding brick-and-mortar grocery subsidiary Whole Foods Market’s private-label brand, 365 by Whole Foods Market, to the Amazon online marketplace for delivery.

Connected Devices and Grocery Delivery

Also in August, reports came that Amazon would begin offering its grocery delivery service to customers not enrolled in its Prime subscription program. The rollout, slated for select cities, sports a tiered structure for delivery fees: $13.95 for deliveries that cost less than $50, $10.95 for orders between $50-$100 and $7.95 for orders of more than $100. Separate PYMNTS’ research shows that 14% of consumers reported that they had exclusively purchased groceries using internet-connected devices. Plus, an additional 39% purchased groceries using connected devices and more traditional means.

There is some evidence that groceries are top of mind when it comes to subscription models and the aforementioned connectivity offered — depending on where you look. Approximately 15% of Amazon Prime subscribers surveyed said that same-day grocery delivery was among the reasons they embraced Amazon Prime membership — but just 8% said it was the “most important” reason. Conversely, roughly 49% said same-day grocery delivery was, and is, a consideration in using Walmart+ subscriptions — and 26% said it remained the most important factor.

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