Walmart has quickly become the top online grocer in the U.S.

The world's largest retailer is quickly becoming a big factor in online grocery shopping. In fact, consumer market researcher Packaged Facts said late last year that 23% of online grocery consumers cited Walmart as the retailer they use most for groceries. Amazon is the only retailer cited more often (38%).

As far as in-store grocery shopping goes, Walmart is the king. About 27% of in-store shoppers said Walmart is the store they most often buy groceries from. That's more than double the number of people that cited Kroger, the second most popular food retailer.

Package Facts noted that Walmart has successfully transformed itself into an omnichannel retailer, in part by turning its thousands of stores into a competitive strength in distribution.

By the end if its 2019 fiscal year (1/31/20), Walmart expects to have 2,140 online grocery pickup sites, covering nearly 70% of U.S. households, and online delivery through 800 stores, covering about 40% of the population.

The company expects to reach its goal of 40% growth in U.S. e-commerce sales for fiscal 2019.

Traditional supermarkets continue to lose market share

An article in the February issue of Shopping Centers Today reported on the affect grocery discounters are having on the supermarket industry, stating that traditional supermarkets are losing market share "thanks to a rapidly advancing horde of competitors seeking to outdo them on price, convenience and quality."

The article quoted an analyst from JLL who said that "consumers are now splitting their grocery shopping across multiple channels - as many as five," and that "by 2018, traditional supermarkets' share of grocery dollars in the U.S. will have shrunk 300 basis points to 37.2 percent."

As we all know by now, the list of traditional supermarket competitors includes large wholesale clubs, supercenters, fresh grocers, and small-format, dollar, drug, convenience and online stores.

And, of course, the Germans are coming. Aldi plans to expand from 1,300 to 2,000 American stores in the next three years, and Lidl is planning to open stores here in 2018.

According to an analyst from PerishablePundit.com, "A box of laundry detergent or Kellog's Corn Flakes is the same no matter where it is sold. That makes it easy for price-conscious shoppers to hunt for bargains on commoditized goods by website, in dollar stores, at Walmart, or in a multiplicity of other food selling outlets. Even if traditional supermarkets can continue to sell center-store items, they have to do so at such deep discounts that they're just not able to generate profitability."

To combat this issue, major chains are focusing more on fresh and prepared foods, and creating "foodie-friendly cheese caves, wine bars, mini-restaurants and more." They are also trying to alter their product mix to include the types of products found at warehouse clubs. Ultimately, traditional supermarkets are trying to make their stores appeal to everyone (like they used to) - discount-oriented consumers, aspirational consumers and affluent consumers.

Meanwhile, online grocery sales continue to grow. The online grocery spend in 2014 was $23 billion, and it is expected to be nearly $100 billion by 2019, or 12 percent of total grocery spending.

Online grocery sales pose no threat to supermarkets, says Moody's

Moody's Investors Service said last week that it doesn't think online grocers pose a significant threat to brick-and-mortar stores, pointing out that the online grocery business accounted for only 0.5% of the overall grocery spend last year.

The company believes online sales are not likely to grow to more than 1% to 1.5% of grocery sales over the next five years.

"Online grocery shoppers skew toward households with annual income of $100,000 or more, " said Moody's. "For most people, home delivery of fresh food is too expensive."

Moody's added that "the logistical challenges associated with delivering perishables and fresh food at a reasonable profit and at a cost that is attractive to price-sensitive and skittish consumers is a major barrier for both aspiring entrants and existing food retailers."

Online grocery shopping growing at high rate

Online grocery shopping is increasing at an annual rate of 9.6%, according to research recently published by IBISWorld. The company also estimates that online grocery shopping will be a $9.4 billion industry five years from now.

Researches say the growth, which well outpaces the U.S. GDP, is largely due to the economic recovery and the increased use of broadband Internet at home and on mobile applications.