Sponsored By

Brick-and-mortar retailers narrow gap with Amazon

Nielsen: Walmart, Kroger, Target reeling in online CPG customers

Russell Redman

March 18, 2019

3 Min Read
Supermarket News logo in a gray background | Supermarket News

Amazon’s e-commerce lead is shrinking as major brick-and-mortar retailers win over more U.S. online customers for groceries and other consumer packaged goods (CPG), according to Nielsen.

Over the past two years, Walmart, Kroger and Target — along with e-grocery enabler Instacart — have far outpaced Amazon in percentage growth of online CPG purchasers, Nielsen/Rakuten Intelligence e-commerce data shows.

Nielsen_CPG_online_buyers_chart.pngSource: Nielsen total U.S. e-commerce measurement powered by Rakuten Intelligence, 52 weeks ended Jan. 31, 2019.

Between January 2017 and January 2019, the number of e-commerce buyers of grocery and other CPG products for Amazon rose 29%, compared with 207% for Walmart, 172% for Kroger and 122% for Target, Nielsen reported. Growth was even faster for Instacart during that time frame, soaring 256%.

“New Nielsen e-commerce data, powered by Rakuten Intelligence, shows that Amazon’s dominance in digital retail — specifically for CPG products — is slipping. In fact, over the past two years, established brick-and-mortar stores have taken share back and closed the competitive gap,” Nielsen said.

How have brick-and-mortar players closed that gap? Retail giants like Walmart, Kroger and Target “turned strategy into reality” by rapidly ramping up their online grocery fulfillment capabilities, not just for home delivery but also for store pickup, according to Nielsen.

Related:New grocery store business coming from Amazon?

The consumer market researcher estimated that the click-and-collect share of all CPG e-commerce sales climbed from 4% to 11% during the past two years. And the grocery/gourmet food category has seen nearly a 50% compound annual growth rate over the past three years.

“These merchants have succeeded, in part, because they’ve embraced the click-and-carry model, where consumers buy an item online and pick it up at a physical store,” according to Nielsen. “Consumers like this model because it gives them the confidence to expand their online shopping beyond health and beauty.”

Amazon still holds a big lead, however. Though Walmart, Kroger and Target each have expanded their base of online customers by at least 90% more than Amazon over the last two years, Amazon’s reach among U.S. online purchasers remains 10 times more than any of those retailers, Nielsen noted.

“The race to master omnichannel retail within the U.S. grocery/CPG space is on. With Walmart’s successful push toward online migration, the rapid rise of grocery delivery players like Instacart, complemented by Amazon’s foray into physical stores, the stage has been set for a battle royale,” Nielsen observed. “And it’s really anyone’s game to win.”

Related:Amazon maintains lead in online grocery market share

All CPG online retail players will face hurdles. In the past two years, 29 million people started shopping for CPG products online, but only two-thirds of all e-commerce shoppers actually make CPG purchases.

Food quality is the chief obstacle. According to the Nielsen/Rakuten data, 76% of e-commerce consumers cite food quality as a deterrent to buying CPG products online. Other barriers to online CPG purchases included cost/fees (42%), don’t trust the process (32%), not as fun as in-store (30%) and takes too long (27%).

The online market potential for grocery/CPG remains high, Nielsen added. Online CPG sales have surged 30% year over year, and 60% of consumers have browsed and ordered CPG items online. Also, 28% of shoppers have made online CPG purchases several times a month.

About the Author

Russell Redman

Senior Editor
Supermarket News

Russell Redman has served as senior editor at Supermarket News since April 2018, his second tour with the publication. In his current role, he handles daily news coverage for the SN website and contributes news and features for the print magazine, as well as participates in special projects, podcasts and webinars and attends industry events. Russ joined SN from Racher Press Inc.’s Chain Drug Review and Mass Market Retailers magazines, where he served as desk/online editor for more than nine years, covering the food/drug/mass retail sector. 

Russell Redman’s more than 30 years of experience in journalism span a range of editorial manager, editor, reporter/writer and digital roles at a variety of publications and websites covering a breadth of industries, including retailing, pharmacy/health care, IT, digital home, financial technology, financial services, real estate/commercial property, pro audio/video and film. He started his career in 1989 as a local news reporter and editor, covering community news and politics in Long Island, N.Y. His background also includes an earlier stint at Supermarket News as center store editor and then financial editor in the mid-1990s. Russ holds a B.A. in journalism (minor in political science) from Hofstra University, where he also earned a certificate in digital/social media marketing in November 2016.

Russell Redman’s experience:

Supermarket News - Informa
Senior Editor 
April 2018 - present

Chain Drug Review/Mass Market Retailers - Racher Press
Desk/Online Editor 
Sept. 2008 - March 2018

CRN magazine - CMP Media
Managing Editor
May 2000 - June 2007

Bank Systems & Technology - Miller Freeman
Executive Editor/Managing Editor
Dec. 1996 - May 2000

Supermarket News - Fairchild Publications
Financial Editor/Associate Editor
April 1995 - Dec. 1996 

Shopping Centers Today Magazine - ICSC 
Desk Editor/Assistant Editor
Dec. 1992 - April 1995

Testa Communications
Assistant Editor/Contributing Editor (Music & Sound Retailer, Post, Producer, Sound & Communications and DJ Times magazines)
Jan. 1991 - Dec. 1992 

American Banker/Bond Buyer
Copy Editor
Oct. 1990 - Jan. 1991 

This Week newspaper - Chanry Communications
Reporter/Editor
May 1989 - July 1990

Stay up-to-date on the latest food retail news and trends
Subscribe to free eNewsletters from Supermarket News

You May Also Like