While sales across all receiving segments increased, the flight-to-value trend continued as Supermarkets served just 30% of active HHs in April 2024 vs. 50% for Mass.
Barrington, Ill. – May 14, 2024 – The April U.S. online grocery market grew 4.4% versus last year, driven by growth across all three receiving segments, as the monthly sales jumped to $8.5 billion, according to the most recent Brick Meets Click/Mercatus Grocery Shopper Survey fielded April 29-30, 2024.
Growth in spending, driven largely by Ship-to-Home, generated most of the year-over-year sales uplift as overall penetration held steady and order frequency slipped compared to a year ago.
Pickup sales for April 2024 grew 2.1% versus last year. Higher spending levels accounted for the gains as the average order value (AOV) climbed while order volume dropped due to a combination of fewer monthly active users (MAUs) for the service, mostly from the over 60-age group, plus lower order frequency compared to a year ago.
Delivery sales climbed 4.3% compared to a year ago. Sales were aided by the expansion of its MAU base as penetration increased across all age groups. The growth in the user base helped drive up order volume versus April 2023 while AOV remained essentially unchanged.
Delivery also benefited from increased focus by Mass retailers, most notably Walmart, on growing their first-party delivery services, assisted by each retailer’s respective membership or subscription program.
Ship-to-Home sales posted a 10.2% gain in April 2024 compared to last year. The growth was primarily due to a substantial year-over-year increase in AOV, after rebounding from a dramatic drop in AOV in 2023 versus 2022. Ship-to-Home sales were also aided by moderate expansion of its MAU base; however, order frequency fell among Ship-to-Home MAUs, leading to a decline in order volume.
Buoyed by the strong year-over-year growth, Ship-to-Home ended April with an 18.7% share of eGrocery sales, up 100 basis points (bps) versus last year. The gain in share came from Pickup, which saw its share of total sales fall to 43.0% from 44.0% in 2023 while Delivery maintained its 38.3% share versus a year ago.
“Delivery sales in eGrocery continue to benefit from significant interest and investment from third-party providers and Walmart,” said David Bishop, partner at Brick Meets Click. “One question related to this growth remains whether many of the newer customers who are attracted by the trial offers will behave like streaming subscription service users who choose to use one service at a time until the ‘free’ period expires, and then jump to the next special offer.”
The size of the overall eGrocery MAU base, which encompasses all three receiving methods, held steady for April 2024 versus 2023. The share of MAUs that rely on just one method during the month remained above 70% in April, while the share that used both a Delivery and Pickup service (from any combination of banners/formats) represented only approximately 15% of MAUs after contracting again.
More eGrocery customers are buying from Mass as flight-to-value behavior continues and membership or subscription programs help attract Delivery customers. For April 2024, Mass retailers supplied orders to 51% of the overall eGrocery MAU base, up 500 bps year over year. In contrast, Supermarket retailers engaged only 30% of the MAU base for April 2024, down 280 bps from a year ago.
The share of Grocery customers (which includes both Supermarkets and Hard Discounters) that also ordered groceries from a Mass service during April 2024 surged to nearly 34%, up almost 800 bps versus April 2023. The elevated rate of cross-shopping may also be shaping customer expectations elsewhere as they compare one service to another.
The likelihood of reusing the same eGrocery service within the next month jumped up 240 bps to 59.9% for April 2024. Grocery closed its gap with Mass as repeat rates climbed 590 bps for Grocery while they fell by 140 bps for Mass. Both formats saw improving rates related to Delivery, while Pickup’s rate declined for both.
The April research found that for households that primarily buy groceries from a Mass retailer and also buy groceries online, 83% completed one or more eGrocery orders with their primary grocer in April 2024. In comparison, for households that primarily shop at a Supermarket and buy groceries online, just 54% bought groceries online from a Supermarket, down 640 bps versus 2023.
“Given the recent shifts in consumer purchasing patterns, especially the increased flight-to-value and rise in cross-shopping between Supermarkets and Mass retailers, grocery executives need to lean on their technology partners to offer solutions that enhance the shopping experience, whether that’s online or in-store,” said Mark Fairhurst, Chief Growth Officer at Mercatus. “Mass retailers, like Walmart and Target, have already invested heavily in their mobile apps, and are now tapping into emerging technologies like machine learning and AI to better predict and adapt to customer behavior in real-time.”
For more information about April 2024 results, check out the Brick Meets Click eGrocery Dashboard or visit the eGrocery Monthly Sales report page for information about subscribing to the full monthly report.
About this consumer research
The Brick Meets Click/Mercatus Grocery Shopping Survey is an ongoing independent research initiative created and conducted by the team at Brick Meets Click and sponsored by Mercatus.
Brick Meets Click conducted the most recent survey on April 29-30, 2024, with 1,704 adults, 18 years and older, who participated in the household’s grocery shopping, and a similar survey in April 2023 (n=1,746). Results are adjusted based on internet usage among U.S. adults to account for the non-response bias associated with online surveys. Responses are geographically representative of the U.S. and weighted by age to reflect the national population of adults, 18 years and older, according to the U.S. Census Bureau.
The three receiving methods for online grocery orders are defined as follows:
• Delivery includes orders received from a first- or third-party provider like Instacart, Shipt or the retailer’s own employees.
• Pickup includes orders that are received by customers either inside or outside a store or at a designated location/locker.
• Ship-to-Home includes orders that are received via common or contract carriers like FedEx, UPS, USPS, etc.
About Brick Meets Click
Brick Meets Click is an analytics and strategic insight firm that connects today’s grocery business with tomorrow’s needs. Our clear thinking and practical solutions help clients make their strategies and customer offers more compelling and relevant in the changing U.S. grocery market. We bring deep industry expertise and fact-based analysis to the challenge of finding new routes to success.
About Mercatus
Mercatus drives digital transformation for retailers through an extensive suite of connected commerce and personalization solutions. We enhance shopper engagement, tailor experiences to individual preferences, and cultivate enduring loyalty across retail businesses of every size. Our mission is to enable retailers to captivate customers, boost sales, foster retention, and deepen loyalty in a digital world. With our cutting-edge solutions, retailers can streamline operations, enrich customer experiences, and realize substantial growth. Embark on the digital transformation journey and unleash the full potential of your retail business with Mercatus.
Media Inquiries
David Bishop, Partner, Brick Meets Click
847-722-2732, david.bishop@brickmeetsclick.com
www.brickmeetsclick.com
