Last week, IRI hosted its annual Growth Summit in Denver (where some hapless attendees were snowed in by an unfortunate blizzard on the second day). For anyone not familiar with IRI, it is one of the world’s largest analytics firms. Among a slew of other assets, it has proprietary data from checkout registers, which gives it a unique picture of what’s going on in a number of sectors, including grocery and mass merchandise. The product is oxygen to brand managers at CPG companies. I had a chance to join a panel moderated by Sam Gagliardi, the company’s head of eCommerce. Sam not only has a wealth of insight from his previous roles at RB, Barilla, J&J, and Colgate-Palmolive but there’s probably no one else in retail with as much primary-source info on the state of online grocery. Sam shared a number of data points that shed light on its current state:

  • Online grocery is growing and large. IRI sized eCommerce at $65 billion, which is a bit bigger than Forrester’s estimates (approximately $50B, including food, personal care, and pets, but IRI also includes a broader set of subcategories such as paper towels and detergent). Forrester estimates the grocery sector to be about a trillion dollars in the US, which suggests eCommerce penetration of 6.5%. IRI also pegged online grocery growth year over year at 32%, which is substantially higher than the 15% that Forrester estimated that eCommerce grew overall last year.
  • Perishables lag behind. Dry goods sell the best online, and beauty products lead the pack. By contrast, refrigerated and frozen goods struggle. Beauty is in fact 10 times more penetrated online than frozen foods. Why this delta? The challenges of fulfillment are still onerous. Thirty-six percent of consumers that Forrester surveyed in the last year who don’t order groceries online say they want to avoid the cost of shipping.
  • Walmart is gaining share. While Amazon is the leading eCommerce player in grocery overall, it is less dominant in food. Across the $65B of online grocery sales, IRI estimates that Amazon has half of the market, but it has only 40% of the share with edibles (which comprises the lion’s share of grocery). Meanwhile, Walmart has more than twice as much share of the online edibles category as non-edibles. Click-and-collect, where Walmart has invested heavily, is also experiencing the most growth.

In short, online grocery and Walmart’s role in it continue to be worth watching. Last-mile challenges continue to impede the growth of grocery delivery, but click-and-collect options are popular with shoppers.