Expert Q&A: What’s next for online grocery in the US?

Online grocery sales in the US are expected to grow more than 100% by 2030. But what’s behind that acceleration?  

In this episode, Euromonitor experts Matthew Barry and Michelle Evans answer pressing questions on the future of grocery e-commerce.  

Press play for their take on Gen Z’s spending potential, whether GLP-1 adoption could reshape demand, the influence of AI on shopping journeys and why store brands continue to gain momentum. 

This episode features the audience Q&A from our US online grocery webinar on 22 July. Watch the full session for detailed sales data across cities, a typical shopper profile in this market and insights into the path to purchase. 

Chapters 

00:00:00 - Introduction 

00:00:33 - How will Gen Z's online grocery spending evolve as they move through life stages? 

00:02:07 - How will current US economic conditions impact e-commerce growth? 

00:03:20 - If health and wellness matter so much, why do price and convenience still win? 

00:05:08 - Will rising GLP-1 adoption slow online grocery spending? 

00:06:19 - Are traditional, emerging or niche brands driving online grocery growth? 

00:07:53 - Does Sam's Club Scan & Go count as an online grocery purchase? 

00:08:23 - How do we measure path to purchase from AI platforms like ChatGPT? 

00:09:32 - Can meal kits make a comeback? 

00:11:10 - How is pet food influencing online grocery sales growth? 

00:12:28 - Which retailer is best positioned to lead grocery e-commerce? 

00:14:14 - Could GLP-1 users' product research habits create new e-commerce opportunities? 

00:18:36 - What share of condiment and sauce sales happen online? 

00:19:31 - How to learn more 

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Transcript

0:22

Thanks for tuning in to this Euromonitor podcast. You're about to listen to some highlights from a webinar about online grocery trends in the US, where our experts share insights into the role of Gen Z, AI and convenience in shaping future growth. You might hear us reference the slides or earlier portions of the webinar. If you'd like to follow along or want to watch the full webinar. You can find a link to the slides and video recording in the episode description. Beyond this conversation, the full webinar gets into where growth is shifting across cities in the US and which retailers are winning share. Let's get into it. Matt, you talked about how Gen Z, you know, is relatively small right now, and they're spending since their younger and don't have as much money. But could you give us an idea of what what their spend might be like as they advance in their careers, start their families and the like? Yeah, I think it's pretty clear they're going to be when they're 35, they're going to spend a lot more on online grocery than the current 35 year olds do, because they're starting out at a much more technological base. And that, of course, on the assumption that they're economically in a similar spot, which is a big assumption. Asking what the US labour market looks like in ten years, it's not something I can say with certainty is going to take place. But speaking, you know, today's 20 somethings should then move up in their careers into their 30s and then spend a lot more money than they do today. So I think they're going to be much bigger than the current 35 year olds. That would say I was one big caveat put on that. And that is we know that having parents in sorry, having children at the home is a big indicator of spending money online grocery, because, you know, you have to have kids running around. You just need the convenience a little bit more. And Gen Z for tilde rate is probably not going to match that previous generations. We know a lot of them are not looking to have kids at the same rate as previous generations, so that could be potentially stumbling block. I don't think this would be that big. I don't think we're going to see that big a fertility difference long term, but it is worth keeping an eye on. Yeah. And you know, I'm a mom of two young kids. Certainly our online grocery spend increase a lot more with the second than it than it did the first. But there was a bump up with both. One question that someone asked, it's somewhat related to, you know, looking at the forecast and projected spend. Their question was, do you anticipate the current US economic conditions to impact e-commerce growth? And they're looking at or they highlighted also the younger generation or lower household income participation? Yeah. Well, I talked about that a little bit. And the context of the K shaped economy. And that is shaping a lot of this. But things we're seeing already though, that shift to those lower income segments, even in an economy that's been Cacia for some time. So I think it's fair to say that even though we need to be keeping an eye on this as a trend, it doesn't seem to be disrupting the overall difference. And I think what's going on fundamentally is that it's getting a lot, you know, cheaper to buy things online, right? The the upcharge is not as big as it once was, even for very like ultra convenient formats. And that means that yeah, it's not the cheapest option, but it's also not that much more expensive, which means it is within the realm of many consumers, even those who are being very cost conscious right now, which to be clear, is most American consumers. Yeah. So there were two questions that I see right now that relate more to to health and wellness as broader trends. So you mentioned that health benefits were not as important as price or convenience with consumers in your surveys. How do you square that with the clear importance of health and wellness, just as a broader trend for consumers today? Yeah. Well, I mean, they want it all, frankly. I mean, if you could have that's convenient and cheap and healthy and tastes good. Yeah, that's ideal. But the question is kind of where the trade offs are going to take place, right. And I think we're seeing wellness is often going to be very linked to convenient wellness formats. Right. It's really doing really well. Like ready to drink protein for example. Right. A category it's very dynamic wellness coded but also convenient wellness coded. Right. Like that is the driving thing globally. Health out of its are number two. And we ask that survey globally. The America is actually slightly or different on that question a little bit more on the convenience aspect, a bit less on the health aspect, which is intriguing. We do know that beyond convenience, health benefits are going to be the things feel to spend more money on. I think there's just a growing scepticism in the market. Like we see a lot of products making health claims, because that is a historically very good way to get people to spend more. And as commanders get more cost conscious, they're starting to ask more questions like, okay, like how much protein do I really need? Right. Is this really worth the up charge? Do I really need my pasta sauce to contain protein in it? And I think we're getting a little more scepticism in the market. And that is weighing wellness down. Not say well it's not important just it's not the, you know, golden bullet it once was for many of these grocery categories. Yeah, I certainly baulked or paused a minute when I saw the protein Cheerios on the shelf. I'm not sure that that it needs to be in everything. Now, another related health related question. You know, obviously we can't talk about grocery without GLP one coming up. Do you do you believe the increase in GLP one adoption is going to slow online grocery spending that we're projecting today? Yeah. Well, not we're protecting I mean, we're projecting increasing gulp. One usage to be clear, right. That's built into the assumptions. It will slow all grocery right there. These GLP ones mean people are going to be eating less. And that's going to be bad for grocery. There's no way to get around I know one of positive stories. Oh they'll shift other categories. And that's true. There's category shifting. But if millions of people eat fewer calories, that's being bad for groceries. And that being said, there's no unique reason to believe that online grocery is uniquely in danger versus offline grocery. I don't know of any indication that you'll be one. Users change their channels that much, maybe a little slightly more toward more health food channels, but I've not seen evidence of that. I don't believe it's really a channel question of GLP one. We can talk about GLP one in great detail about category mix, things like that. But in terms of channel, I don't think it's gonna be that big of an impact. A question that came in a couple of minutes ago is when you look into the top categories, growing any sense of it as more traditional brands, emerging brands or niche brands driving that growth? We left off the big one, which is store brands. That's the big one driving growth. Fundamentally, it is the ones that speak consumers concerns, which above all are affordability. So that's going to benefit store brands. Above all. Within that I guess I would give it to more insurgent brands after that, although I think niche versus insurgents kind of weird distinction. I think that in many ways the niche brands are going to be the insurgent ones. But yeah, the traditional under struggling. And that's just not just for cost reasons. A lot of things you have, of course, ultra processed food backlash, you have some kind of feel burned out by pricing increases in recent years that that shrink and vigilance. And also, I think an unappreciated factor is Gen Z general scepticism of all institutions. Right. If you look at Gen Z is very much a backlash against kind of everything, you know, more like mainstream, right? Whether that be political parties or media or whatever else. And that also reflects in food categories. Right? Once being an iconic, you know, brand known for decades was a big selling point. Now law consumers like that's not a selling point. Like, oh, my parents or grandparents ate it. Like that's a problem where they used to be. That was a big benefit. Yeah it has switch. So there were a couple of methodology questions I'm going to share with everyone what the question was. There was one that we answered directly to the the audience. So the question was does Sam's Club the scanning go? Is that counting in our online sales? And the short of it is yes, it is. The consumer, when they're in store, is buying it online, in the app and essentially picking it up in store. So this is going to show up in our panel of online purchases. We are, as a side note, also able to break out percentage of delivery versus pickup as a cut of this data, which would help one get a little bit further clarity. And then there was also a question are you able to measure or how are you able to measure path to purchase from AI like chatbot. And I'll I've been looking at this in our research, so I'll filled it really quickly. Essentially we're looking at online shoppers and tracking their URL history. So overall we're tracking 30 million. There's over 5 million that have have done something related to using these platforms. So that's how many is in this panel. And essentially what happens is when someone goes from the AI platform like a chatbot and they click into a product page or the or on the retailer site, there's a source code. So we're following that. Is it going to the product page? Is it going to a conversion page. So we have that map to 56 countries and 100 K clickstream panellists. There were some different questions around some of the category analysis. So let's dive into that. Matt. So you talked about how there's trouble with mill kits in recent years. Do you think there is a path for that category to stage a comeback? I think that's a tricky one. I think meal kits are very much a thing that was really well suited for the pandemic, because they require you to have a very fixed schedule, and I think the core challenge of the meal kits has been that it's hard to adapt that for post-pandemic lifestyles, where you don't know what exactly your meals are going to look like every week consistently, that made lot of sense. 2021. But now, you know, 2026. It's difficult. Also, there's a high rate in that category. People got use these like big discounts right away. And then you know they keep kind of cycling through. I will note that one that's doing well is factor, which is not a traditional meal kit. It is, technically speaking, a frozen meal as we track it. So it's not a meal kit, but behaves like a meal kit in many ways. And that has been doing well. And I think that solves all the problems, because you don't need to be as locked in in terms of your schedule. You can put it in the freezer and it kind of stays there for a while. And that's much more adapted to the 2026 lifestyle. I think where the category is going to do well is where it becomes more factor, like where it's a little bit less in locking you into a schedule and a lot more on having more flexibility. Also note that strong emphasis on wellness to the earlier points factors. I think a really good job of being the affordable high protein meal option. It's drawing perception of that and that does really well right now. So the category is not without hope. I think you will have to look very different than it has in the past. That's fair. So someone brought up obviously we haven't been talking about pet food in all of this. So I don't know if you looked at this in our data while preparing this content or not, but they were wondering how pet food sold at grocery might impact online sales, you know, and value and growth and how it might change these figures. Would the percentage change be higher or lower than traditional pet food channels, Amazon or Chewy? Okay, well, I'm not a pet food expert, to be clear. So take this all the grain of salt. The one thing I do know about pet food is of all the categories of CPG that we track in online sales, it has the highest share of online sales of any of them. So I would suspect everything I've said about human food is even more true for pet food. Probably all that's going over index very much so. Online channels, it makes a lot of sense in terms of online things I talked about. It's, you know, relatively non-perishable, for example. And then people tend to like the more like specialised DTC stuff for the more unique approach to the pet food. I want to say much more beyond that, because, again, I'm not our pet food expert. If you want to reach afterwards, we can do these cuts with pet food, I believe. And we have people who are more special, specialised than myself on the pet food question, who can give you more details? So I feel like this question I'm going to ask you is is more well, it's more retailer driven and I feel like a little bit more prediction based in some ways. Which retailer would you say is the most advanced for e-commerce capabilities? Who's going to be driving the the story? There's going to be different question who's the most advanced, who's driving the story? Not necessarily the same one who's driving the story is clearly Walmart. Like I said, it's already number one. And gaining sheriff still, especially the expense of Amazon at number two. So Walmart's driving the story forward. In many ways it is Walmart's game to lose at this point. Who's the most advanced. That feels like a very like qualitative question. I don't really want to say not being the expert in the underlying technologies, so I'll refer to answering that one. But Walmart is definitely the one who's driving the agenda forward right now. Yeah, Amazon certainly in the mix. But I mean, Michel, if you want to comment on that, feel free. Yeah, I would say it certainly probably both you know, say is with the Big Daddies because they have the, you know, investment. I do like what Walmart's doing. Just their their store presence there quicker delivery. You know they're offering toilet delivery on some things obviously vast pickup capabilities. So there you know I think when I built some analysis looking at some of our e-commerce data, I split it up by broad categories. You know, is it edible non edible that type of thing. And they were ganging share versus everyone. So you know certainly they play best in the perishable versus like an Amazon. But they're they've been making strong movement over the last couple of years. There is a question a follow up question to the GLP one conversation. Would GLP one users in there need to maybe research products to fit their new habits, their new needs? Could e-commerce then be beneficiary? They said. Not to mention many are getting their GOP ones from online pharmacies, including Amazon. So does that help them there? Yeah, I think about blending the two together because yeah, you have a lot of pharmacies that also have grocery operations. And that's true offline as well. I know like the shop writes, doing a promotion where if you follow your first time GLP one and their on site pharmacy, you get a welcome box that has like collagen, peptides and electrolyte drink mixes. So there's a lot of options on that one. I think the research question is important one, because yeah, that's that's going to shape a lot what people are going to then be buying online. And you can see an obvious path. I think really in AI sense, maybe we should all got thoughts on this. Like if you're shopping, if you're asking NEM for advice on what should I eat now that I'm on, this is like there's a very natural path then into the retailer. Again, I'm not saying a whole lot of I don't have a good answers on changing retailers yet, but it feels like that's a very obvious path for things to go in long term. Yeah. So yeah, as you know, I've been looking at the AI space a lot. And you know, we look, you know, from a category perspective, obviously AI is impacting categories like beauty, like skincare type products or supplements and health space a lot more because AI really has, you know, there's something that can answer because it's, you know, these are high consideration categories. They, you know, may come in a higher price point with their anti-aging. And they're they're very personal. You know, because you want to look good, I suppose, with the, with the skincare and whatnot. Now food is food is seen obviously a bit slower uptake. I know there's some data like where we looked at AI referrals and split it up across different categories. And something like snacks was at 4%. So small. But I do think it it it is promising from the perspective of obviously a lot of when you look at e-commerce growth across retail categories, a lot of the food categories are driving that growth story. And then I think exactly to this point that your GLP one users and just in general consumer shifting, wanting more functional foods, higher protein, more fibre, all of those creates a moment where consumer is is wanting knowledge. And that could help to to boost, you know, I suppose e-commerce. But I think also certainly that AI activity as well across this. Yeah. To that point the most categories and grocery are going to be the ones that are most fun to shop for individually. Right. These stacked foods think that makes sense, right? People enjoy looking at snack foods, right? They like having much of candy options, just like I said earlier. Right. And picking the one they like, they don't want necessarily. I tell them which one. Like they know what candy bar they want to pick or something where they want the advice or they need the advice, like maybe picking anti-ageing product. They're much more likely to defer that off to an AI because they don't. I don't know which is best for my skin, but I know which kind of chocolate I think I might enjoy the most, right? Those questions are how much do they really enjoy being the one driving things versus taking advice? Yeah, I think that plays a role. But if you're if you're switching like this question alludes to, if you're starting to change your habits and are looking for what is a snack that could be healthier or, you know, have some greater health benefits or won't be as horrible for me as I used to eat that could create that that moment of change. Right? Well, that goes a larger one question what it does to indulgence as a trend in general. And I think that's probably on the scope of today's webinar, but it do reshape kind of how people approach indulgence. So you're going to have fewer occasions where someone is thinking about what kind of snack would I enjoy the most, right. Because the nature of guilty ones that push you in a different direction. It's not which stock line joy the most, which is which snack will provide me the benefits that I need to fight muscle atrophy or whatever the case may be. So one question, and I know it's, I believe, a space that's near and dear to your heart. Someone's asking what share of condiments and sauces is online. Oh, I don't know it. Top of my head. We can definitely pull that data later. Do you have any thoughts of how that that area is progressing online? Yeah, like I said earlier, cooking gradients and meals as we define as a category is under indexing. You're probably thinking that slight early on, but that is dragged down so much by meal kits. If you look at the other posts, that category of cooking oils, the cook ingredients, sources, they tend to behave very similarly to staple foods, which means that they're going to be probably, if I had guess about 30% of sales online or something, I think that's roughly the number. Again, I have to check we have that data, but there's no reason to believe sources are going to be significantly different than most staple grocery categories. We hope you've enjoyed this episode. Remember to visit the link in the description to watch the full webinar and get the slides where you'll find detailed market insights and data for the US online grocery channel.