Hi all—Blake here. Hope everyone had a great Memorial Day weekend!

This month I want to talk about something that doesn't always make for a dramatic headline: the slow, compounding cost of a digital experience that's good enough to have, but not good enough to win.

Walmart and Albertsons both closed out their fiscal years recently, and buried in those results is a pretty clear answer to a question a lot of regional grocers are quietly sitting with—whether the gap between their digital experience and the national chains has grown too wide to close without a real investment. I think it has, and this month we're getting into why.

Stick around for an Exciting Update at the end!

🔨 Your Digital Store Needs a Remodel
🎉 Exciting Update: K-VA-T Food Stores Chooses Homesome as Digital Commerce Platform

There was a time (not very long ago, really) when the question every retailer had to answer was simply whether they were online at all.

A website. An app. Curbside pickup. Delivery. Digital coupons. The weekly ad online. Loyalty points. A recipe page. Those were the boxes, and a great many grocers checked them, dusted off their hands, and moved on to the next problem. Digital was a channel, a feature, a thing you had the way you had a deli counter or a floral department—important, certainly, but not the whole store, and not the thing you rebuilt around.

That question has been retired. The new one is harder, and I don't think most regional grocers have fully reckoned with it yet.

Is the experience good enough to compete with the retailers who have made digital their primary growth engine?

001 // The Numbers

Walmart's fiscal 2026 results tell the story plainly. Global e-commerce reached $150.4 billion. Walmart U.S. e-commerce contributed 4.3 percentage points to comparable sales, up from 2.9 points the year before, driven primarily by store-fulfilled pickup and delivery. Customers who use Sparky, Walmart's AI shopping assistant, are building baskets roughly 35% larger than those who don't—a figure CEO John Furner attributed to Sparky's ability to turn intent into a fulfilled order through delivery, pickup, or in-store, connecting digital engagement to the company's forward-deployed inventory and 1.5 million associates. The advertising business grew 36%. Membership fee revenue hit a record first-quarter high. These are not numbers from a company running a digital side hustle.

Albertsons is moving in the same direction. Digital sales grew 21% in fiscal 2025. Digital penetration crossed 10% in Q4 for the first time. More than half of online orders are fulfilled in under three hours, and most delivery households are eligible for thirty-minute flash delivery, the company's fastest-growing segment. The loyalty program has grown to nearly 50 million members, up 13% year over year. Albertsons' AI search tool is already delivering a 10% increase in basket size for customers using it, and personalized ad pilots in Q4 produced a 90% lift in conversion and click-through rates. CEO Susan Morris described the company's four foundational technology bets for fiscal 2026—digital customer experience, merchandising intelligence, labor optimization, supply chain optimization—and framed AI-driven personalization as the thread running through all of them.

What these numbers represent, taken together, is the compounding return on years of infrastructure investment that did not make for exciting announcements but that shows up, eventually, in the distance between retailers who are growing and retailers who are wondering why they aren't.

002 // The Experience Gap

Digital grocery has become the front door to the store, the loyalty engine, the merchandising surface, the fulfillment operating system, and increasingly the layer through which a shopper—or an agent acting on a shopper's behalf—decides where to spend their money this week.

If the search experience is weak, customers leave. If digital coupons feel disconnected from loyalty, customers stop engaging. If the weekly ad is a PDF instead of a shoppable experience, customers don't build baskets. If pickup and delivery are bolted onto store operations instead of integrated into them, the economics never improve. And if recipes, personalization, substitutions, fulfillment, and loyalty all live in separate systems—touching but never quite connecting—the customer feels the fragmentation, even if every feature box has been checked. One industry analysis put it plainly: most regional grocers struggle with fragmented systems or reliance on third parties that strip away the customer insight they need, and without a unified view of the customer, it is nearly impossible to deliver the kind of engagement that competes with what the national chains are now doing.

The retention data makes the cost of that fragmentation concrete. The gap between average digital grocery retention—around 34%—and best-in-class loyalty member retention, which runs closer to 68%, is among the clearest measures of what integrated, personalized digital experience is actually worth. That gap is a systems problem, and coupons and re-engagement emails don't close it.

There is a newer dimension to this worth watching. A recent study ran more than eighty consumer-intent queries across ChatGPT, Claude, Perplexity, and Gemini, scoring grocery retailers on how often they were cited, their position in the answer, and their dominance across sub-categories. The finding: market share no longer predicts AI citation share. Walmart holds roughly 21% of U.S. grocery sales and earns an estimated 8 to 10% AI citation share across premium query categories. The retailers who dominate those answers—Costco, Trader Joe's, Whole Foods—do so because of structured data and the kind of coherent digital identity that AI models can interpret and recommend. Without that, a retailer is not being passed over. It simply does not appear.

003 // The Remodel

Think about the physical store for a moment.

When a store gets old—when the fixtures feel dated, when the layout no longer matches how customers shop, when a competitor opens a brighter, cleaner, more modern location a mile down the road—grocers know what to do. They remodel. They invest in the entrance and the lighting and the departments and the flow and the signage and the merchandising, and they create that moment when a customer walks in and feels, in some way they may not be able to articulate, that the store is alive again.

Your digital store needs the same thinking. For a great many regional grocers, it does not need another patch or another plug-in or another point solution bolted onto the side of something that was never quite designed to hold it. It needs a remodel—a genuine rethinking of the experience from the customer's perspective, from search to basket to checkout to the door of their car.

A modern digital grocery experience should make it easy to search, discover, clip, build a basket, reorder, plan a meal, shop the weekly ad, redeem loyalty, choose a fulfillment window, and complete the trip with confidence. It should make the associate's job easier. And it needs to be ready for a world where the next shopper may not be tapping through your app at all—it may be an agent, searching on the customer's behalf for the best products, prices, promotions, and fulfillment options available. Walmart has built for that world. Albertsons is building for it. The regional grocers who close that gap now will be the ones defining the category a few years from now. Those who don't will keep reading the quarterly numbers from the national chains, wondering where their customers went.

The answer is not a complicated one. The national chains are no longer just servicing digital. They are rebuilding around it, and the experience has become the thing—not the channel, not the feature, not the box that gets checked and moved past.

K-VA-T Food Stores Inc., the parent company of Food City, has selected Homesome to power its digital commerce. Homesome’s full platform suite will deploy across 140 Food City locations, providing a retailer-branded, end-to-end digital experience for customers throughout Virginia, Alabama, Kentucky, Tennessee and Georgia.

Homesome’s Enterprise, Fulfillment and AI Platforms give Food City a purpose-built website and mobile app to translate the regional banner’s in-store experience into a digital presence owned and controlled by the retailer, with fulfillment operations and personalization capabilities geared to the specific demands of high-volume grocery operations.

“We looked at everything available to regional grocers today, and nothing else came close,” said Kevin Stafford, VP of center store operations at Abingdon, Va.-based K-VA-T. “Running a banner like Food City means managing weekly ads, digital coupons, loyalty, in-store promotions and a seamless e-commerce experience—all of it connected, all of it on-brand. Most platforms can handle one or two of those things. Homesome is the only one to bring all of it together, and we’re confident that will translate into a best-in-class experience for our customers and our associates.”

Read the full press release →