Posts Tagged “online grocery sales”
A decline in the frequency of online grocery orders drove a 1.2% year-over-year drop in total online sales to $95.8 billion in the U.S. online grocery market in 2023, according to the annual results of the Brick Meets Click/Mercatus Grocery Shopper Survey released Thursday, Supermarket News reports.
It’s the second year in a row that the order frequency of active monthly users (MAUs) declined, according to the report, which surveyed 21,000 shoppers in the U.S. That year-over-year contraction in online orders came in at 6% compared to the prior year, surpassing the 4% year-over-year decline in 2022, the report noted.
The decline in orders was exacerbated by a 300 basis-point increase to 34% in the number of MAUs who said they made only one online grocery purchase per month in 2023.
Despite the drop in online orders for the year, the base of MAUs rose 2% year over year. Shoppers appear to have largely settled on a receiving method with 70% saying they exclusively relied on either pickup, delivery, or ship-to-home, up 172 basis points from the previous year.
Pickup held steady as the most popular way of receiving online orders, growing its share of online sales by a modest 56 basis points to end the year at 46%. The report added that the expanded availability of delivery methods due to increased competition did not appear to help grow the receiving method, which experienced a sales decline of 0.9% for the year and captured 37% of the online sales market. Meanwhile, the ship-to-home method dropped 66 basis points to make up 17% of the market for the year.
“These annual results show that 2023 was very challenging for grocery retailing as higher prices chipped away at household purchasing power even though inflation has slowed considerably since its peak in 2022,” said David Bishop, partner at Brick Meets Click, in a statement. “Despite the challenges, pickup continues to prove its appeal to shoppers, even without the benefits of expanded availability and/or aggressive promotions that aided delivery in 2023.”
Mass merchandisers and hard discount grocers expanded their shares of the online grocery market in 2023 by 460 basis points to end the year with 45% due to strong MAU growth. The growth came at the expense of the supermarket format, which dropped 390 basis points to 29% for the year, a result of declining MAUs and order frequency.
Shoppers increasingly chose to place their online purchases through both mass merchandise and supermarket formats for the year as the cross-shopping rate increased by 150 basis points from the previous year. Nearly a third (30%) of shoppers purchased online groceries from both in the same month over the year, the report noted.
The repeat intent rate – the share of MAUs who are very likely to use the same service again – for the pickup and delivery methods of online purchases declined in 2023 by 63 basis points to 61%, a trend driven solely by a decline in repeat intent for grocery services, which fell 311 basis points to 54%. That’s compared to an increase in repeat intent for mass merchandise shoppers, which grew by 48 basis points to 66%.
“As Walmart grabs market share through its price leadership and omnichannel strategies, regional grocers find themselves in a precarious position. To remain competitive, they must intensify their efforts in improving customer engagement, offering tailored personalization, and building loyalty. This strategic shift is not just about weathering the storm of price inflation and intense competition, but about thriving in it,” said Mark Fairhurst, global chief growth officer at Mercatus, in a statement. “By providing a shopping experience that is both seamless and highly personalized, grocery retailers can retain their existing customer base and gradually attract a wider audience.”
Total online grocery spending declined 18 basis points to capture 12.5% of the market for the year. When considering just the pickup and delivery methods – most stores do not offer ship-to-home as a delivery method – the decline was a mere 6 basis points year over year and made up 10.4% of all grocery spending in 2023.
Over 70% of U.S. households ordered groceries — including fresh produce — online in 2021, at least once.
The U.S. online grocery market captured $8.9 billion in sales during December as more than 69 million households shopped online for groceries, according to the Brick Meets Click/Mercatus Grocery Shopping Survey .
December’s results increased annual online grocery sales to $97.7 billion for 2021, as more than 70% of U.S. households, or 93 million, received one or more orders during the year, according to a news release.
Brick Meets Click conducted the survey on December 29-30, with 1,836 adults, 18 years and older, who participated in the household’s grocery shopping. Responses are geographically representative of the U.S. and weighted by age to reflect the national population of adults according to the U.S. Census Bureau.
Even though most grocery retailers used third-party delivery platforms when they began selling online, the U.S. is a pickup-dominant market. That dominance continues across markets of all sizes, except in some of the largest urban markets where delivery overtook pickup for the first time in December 2021.
Full-year results for 2021 showed that the pickup segment grew its share of online sales to 45%, up 5 percentage points versus 2020, while delivery’s share remained basically unchanged at 33% and ship-to-home’s share dropped 5 points to 22%.
“If retailers are surprised by these results, it’s likely because they are missing a broader view of how and where customers are shopping online for groceries,” Brick Meets Click partner David Bishop said in the release. “Even before the pandemic started, pickup was preferred over delivery. Then in April 2020, pickup took the top spot away from ship-to-home, and it’s kept that spot ever since.”
For 2021, the average number of orders placed by Monthly Active Users (MAUs) held relatively steady at 2.74 per month, down just 1% versus 2020. However, the volatility in 2021’s monthly order frequency dropped 60% versus 2020 levels, signaling that buying patterns are becoming more entrenched at a level that is 35% higher than pre-COVID levels, according to the release.
When 2021’s online share of total grocery spending is adjusted to exclude ship-to-home because most grocers do not offer this option, the results reveal that the combined pickup and delivery segments captured 10% of total grocery sales, up 2 points from 2020.
Throughout December 2021, the share of grocery’s monthly active users who also placed at least one online order with mass retailers jumped to 29.1%, setting a record high for this shopper metric. For these households, cross-shopping with Target rose sharply while Walmart dipped slightly, and the gap between the two retailers shrank to only 2.5 percentage points, the smallest it has ever been.
“The state of online grocery in the U.S. today underscores not only the need for grocers to compete online for sales, but also the imperative to develop and implement more sound strategies that improve profitability as sales growth becomes more challenging,” Mercatus president and CEO Sylvain Perrier said in the release.
That means consumer satisfaction is paramount, requiring operations be efficient for the retailer and to cater to consumers’ quality and convenience demands, he said.