As the grocery retail landscape evolves, the growing importance of affluent households in the online grocery sector is reshaping market dynamics. Data from Brick Meets Click’s new eGrocery Shopper Profile Report highlights significant shifts in consumer behavior in the first half of 2024 (1H24), offering key takeaways for grocery retail professionals aiming to stay ahead in a competitive market.

1. Affluent Households Fuel Walmart’s Growth

Walmart’s impressive growth in 1H24 is largely attributed to its success with affluent households (those earning $200,000+ annually). While traditionally known for serving lower-income customers, Walmart has seen its affluent customer base grow almost five times faster than its overall average monthly active users (aMAUs). This segment spends 1.5 times more per month than lower-income households, positioning them as a highly valuable target for online grocery retailers.

This shift signals that the so-called "flight to value" is not just limited to lower-income shoppers. Even wealthier households are looking for better deals, driving them to shop at retailers like Walmart, which offers both value and convenience. This trend is one grocery retailers should pay close attention to, especially as affluent customers are known for higher order frequency and average order value (AOV).

2. Supermarkets and Other Competitors Are Losing Ground

Walmart’s gain in the affluent segment comes at the expense of other grocery retailers. Supermarkets, Hard Discounters, and Target have all posted declines in sales with higher-income households. For example, while Walmart saw a surge in its AOV with affluent shoppers to $119 (a 40% increase year-over-year), Supermarkets and other competitors faced a more challenging landscape.

For grocery retailers, this data highlights the importance of catering to affluent shoppers with personalized promotions, high-end product offerings, and a seamless digital experience. As Mark Fairhurst, Chief Growth Officer at Mercatus, notes, “Regional grocers risk losing more business driven by affluent customers to Walmart if they don’t effectively address shifting expectations.”

3. Lower-Income Shoppers Are Pulling Back

While Walmart continues to hold onto its base of lower-income shoppers, data shows a decline in online grocery spending from households earning less than $50,000 annually. For this group, Walmart’s sales dipped 6%, while Supermarkets and Target saw a more significant drop of 20%.

This reduction in spending among lower-income households may be driven by inflationary pressures, necessitating grocery retailers to explore creative ways to maintain engagement with this budget-conscious customer segment. Implementing targeted promotions, loyalty programs, and budget-friendly options can help keep these shoppers coming back, even during times of financial strain.

4. Order Frequency and Cross-Shopping Trends

Walmart saw a slight increase in its overall eGrocery order frequency in 1H24, with affluent customers still placing an average of over two orders per month, despite a slight drop in frequency for this group. More importantly, affluent shoppers’ higher AOVs make them a crucial demographic for grocers looking to boost their eCommerce revenue.

Interestingly, one in six Walmart customers also cross-shopped at Supermarkets, but this rate declined among two groups - the least and most affluent households. This suggests Walmart is capturing a larger share of wallet from these customer groups, reducing the likelihood that they’ll turn to other formats.

5. What Grocery Retailers Can Do

To remain competitive, grocery retailers must refine their value proposition. Here are some strategies for staying relevant in the face of Walmart’s growing influence says Mark Fairhurst at Mercatus.

• Offer Unique Products: Differentiate from big-box competitors by offering exclusive, high-quality items that appeal to affluent consumers.
• Personalized Promotions: Use customer data to deliver personalized deals that resonate with both affluent and lower-income segments.
• Elevated Service: Providing exceptional customer service, both online and in-store, can help foster loyalty and enhance the overall shopping experience.
• Seamless Digital Experience: Invest in digital platforms that offer convenience, personalization, and ease of use to retain and attract online shoppers.

Conclusion

The rise of affluent households in the eGrocery market offers both opportunities and challenges for grocery retailers. Walmart’s success with this segment highlights the importance of delivering value while also meeting the expectations of wealthier consumers. 

As competition heats up, grocery retailers need to sharpen their strategies and focus on building stronger, more personalized relationships with both affluent and lower-income shoppers to remain competitive in this evolving market.

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This blog is intended to provide grocery retail professionals with a snapshot of the current trends shaping the online grocery landscape, helping them to better align their business strategies with emerging consumer behaviors.

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