The U.S. online grocery market posted $7.2 billion in total sales, down 7.0% compared to last year, according to the latest monthly Brick Meets Click/Mercatus Grocery Shopping Survey fielded July 29-30. This month’s downtrend was seen across all three receiving methods and was driven by a pullback in order frequency plus constrained spending per order, despite a larger base of monthly active users (MAUs) than the prior year.
For July, the overall MAU base continued to grow as the total number of U.S. HHs that bought groceries online increased nearly 5% versus last year. This growth was driven by a more than 7% increase in the Pickup MAU base, while Ship-to-Home’s base remained flat and Delivery’s contracted 1% compared to July 2022.
Order frequency, which dropped 10% versus last year, was the main contributor to the monthly sales decline, reducing the total number of online orders by nearly 6% for July 2023. Delivery, which plummeted 13% versus the prior year, accounted for almost three-quarters of the drop in online orders, while Pickup dipped by 3% and Ship-to-Home by 2%.
Constrained spending in July was the other major factor impacting overall sales results. The average order value (AOV) slipped approximately 1.5% versus July 2022. Delivery climbed less than one-half a percent, and Ship-to-Home, with the smallest AOV, posted a 1% gain year-over-year; however, neither of these gains was large enough to significantly offset the 2% dip in Pickup’s AOV.
“July’s results reflect the growing financial challenges many consumers are facing today,” said David Bishop, partner at Brick Meets Click. “These challenges along with evolving expectations, driven by experience engaging with Mass, are contributing to the growing gap between conventional grocers and their Mass rivals.”
The share of sales shifted versus last year. Pickup and Ship-to-Home expanded, while Delivery contracted. Pickup finished the month with a 45% share of eGrocery sales, up more than one point compared to July 2022 as its sales slipped 4.5%. Ship-to-Home gained over one share point in July, ending with a 19% sales share and a 1.0% dip in sales. And Delivery ceded nearly 2 and one-half points, completing the month with just under a 36% share as its sales fell 12.8%.
The Mass and Grocery formats continue to perform very differently. Mass experienced a surge in customers while Grocery experienced only a modest gain in MAUs during July, similar to the trend observed last month. Order frequency also declined for both formats, although the drop for Grocery was much greater than for Mass. In addition, the average order value for Grocery dipped by more than 5% while Mass finished up very slightly.
Although the overall repeat intent rate of 63% was down just 50 basis points (bps) for July versus the prior year, the repeat intent rate for Mass was nearly 18 points higher than for Grocery. The gap between the two widened by 730 bps resulting in the largest gap since the surveys started tracking this metric in January 2021. Much of the monthly gain for Mass can be attributed to a strong improvement in its repeat intent rates for Delivery. Mass also made slight gains in the already large gap it has historically enjoyed associated with Pickup.
Online’s share of total grocery spending declined 130 basis points in July to 13.2% versus last year. Excluding Ship-to-Home, since most conventional supermarkets don’t offer it, the adjusted contribution from Pickup and Delivery finished at 10.7%, down 120 basis points compared to a year ago, due to Delivery’s dramatically weaker performance for the month.
“To drive continued engagement, regional grocers need to offer their customers value for their money and more convenient ways they can save, such as encouraging repeat purchases with promotional offers and easy-to-use digital coupons,” said Sylvain Perrier, president and CEO, Mercatus. “Loyalty programs should be thoughtfully integrated so that rewards are easily accessed and prominently positioned to remind customers of the monetary value they’re receiving.”
About this consumer research
The Brick Meets Click/Mercatus Grocery Shopping Survey is an ongoing independent research initiative created and conducted by Brick Meets Click and sponsored by Mercatus. Brick Meets Click conducted the survey on July 29-30, 2023, with 1,795 adults, 18 years and older, who participated in the household’s grocery shopping.