Barrington, Ill. – March 13, 2024 – The U.S. online grocery market finished February with total monthly sales of $7.9 billion, down 10.5% compared to 2023, according to the most recent Brick Meets Click/Mercatus Grocery Shopper Survey fielded February 28-29, 2024.
Lower average order values (AOV) were the central catalyst driving the downward year-over-year sales trends as Ship-to-Home dropped 15.4% and Pickup fell 12.8%. Delivery, the only method to expand sales, was up 4.7%, aided by a strong rebound in monthly active users (MAUs) versus last year.
During February 2024, the weighted AOV across all receiving methods fell 10% compared to 2023. No method was spared from the AOV downturn: Ship-to-Home and Pickup both fell 13% and Delivery contracted by 7% versus last year. Most retailers and formats also experienced lower AOVs versus last year to varying degrees. Walmart had a relatively small 2% drop in AOV for Pickup and Delivery orders versus last year while the Supermarket format reported a 15% drop AOV for Pickup and Delivery compared to February 2023.
In contrast to the spending downturn, all three receiving methods expanded their respective MAU bases. These across-the-board gains were driven by an increase in the share of MAUs who received orders via multiple methods during the month as the overall user base slipped slightly, down 30 basis points (bps) compared to the prior year. Delivery, however, posted a significantly stronger expansion than either Pickup or Ship-to-Home due to easier comparisons versus last year.
Looking at the MAU trends by income level showed the lowest-income group of households (earning less than $50,000 annually) reported several shifts worth noting since they represent the largest segment of shoppers. For example, fewer lower-income households reported using a Pickup or Delivery service during February 2024, as penetration pulled back 70 bps and 460 bps, respectively, compared to last year.
In addition, among the lower-income households, Walmart experienced a 150 bps drop in penetration compared to a 60 bps drop for Supermarkets. These results are due in part to the fact that the lower-income households represent nearly half of Walmart’s MAU base for online grocery orders but just under 40% for Supermarkets. One factor likely contributing to the year-over-year trends among these households is the expiration of the pandemic-era emergency SNAP allocations at the end of February 2023.
“Convenience remains one of the primary motivations for shopping online for groceries, however, for some customers, cost considerations are now weighing more heavily on their decision on how to shop,” said David Bishop, partner at Brick Meets Click. “This means that the explicit costs associated with eGrocery services are more likely to impact how these customers grocery shop, whether that’s returning to in-store or shifting where they shop online.”
While the total volume of eGrocery orders was essentially flat on a year-over-year basis, Delivery’s strong performance offset the order volume declines experienced by the other two methods. The number of orders fell 7% for Pickup and 3% for Ship-to-Home versus last year. In contrast, the 13% jump in Delivery order volume during February was predominantly driven by the expansion of its MAU base compared to the prior year, rather than a jump in order frequency.
Due to the shifts in segment order volume and the overall declines in AOV, Pickup’s share of eGrocery sales contracted to 43.4% in February 2024, falling by 468 bps compared to last year. Meanwhile, Delivery expanded its share by 570 bps, finishing the month with 39.3%. Ship-to-Home ended February with 17.3% of eGrocery sales, down 102 bps versus 2023.
The continued pressure on consumers’ purchasing power likely prompted the 170-bps increase in cross-shopping between Grocery (which includes Supermarket and Hard Discount) and Mass last month. During February 2024, more than 30% of households that bought groceries online from a Grocery service also did so from a Mass retailer’s service. This continues a steady upward trend that has doubled the cross-shopping rate compared to pre-COVID rates.
“Although regional grocers may not always be able to match the low prices offered by Mass merchants like Walmart, they can capitalize on customer insights to refine their service offerings” said Mark Fairhurst, Global Chief Growth Officer at Mercatus. “By using data to understand customer behavior, regional grocers can personalize shopping experiences, offer targeted savings, and ultimately, provide value that goes beyond pricing. This strategic use of customer data is essential for regional grocers to differentiate their services and maintain customer loyalty in a highly competitive market,” he added.
During February, the composite Grocery and Mass repeat intent rate for Pickup and Delivery fell 850 bps versus 2023 to 56.2%, dropping to one of the lowest levels reported in over two years. This decline in composite repeat intent rate was driven by second- and third-time customers who were significantly less likely to use the same service again within the next 30 days compared to last year’s rates.
Mass continues to outperform Grocery as the gap between their respective repeat intent rates reached a record high of more than 20 percentage points, driven by a dramatic slide in Grocery’s repeat intent rates compared to February 2023.
For more information about February 2024 results, check out the Brick Meets Click eGrocery Dashboard or visit the Monthly State of the eGrocery Market 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 February 28-29, 2024, with 1,755 adults, 18 years and older, who participated in the household’s grocery shopping, and a similar survey in February 2023, with a sample of 1,745. 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 helps leading grocers get back in charge of their eCommerce experience, empowering them to deliver exceptional retailer-branded, end-to-end online shopping, from store to door. Our expansive network of more than 60 integration partners allows grocers to work with their partners of choice, on their terms. Together, we enable clients to create authentic digital shopping experiences with solutions to drive shopper engagement, grow share of wallet and achieve profitability, while quickly adapting to changes in consumer behavior.
Media Inquiries
David Bishop, Partner, Brick Meets Click
847-722-2732, david.bishop@brickmeetsclick.com
www.brickmeetsclick.com
