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Online grocery sales decline: Survey

Cost-conscious shoppers are shifting to mass merchandisers

U.S. online grocery sales in November dropped about 10% from the year-earlier period to $7.7 billion, according to the monthly Brick Meets Click/Mercatus consumer grocery shopping survey.

Online’s share of total grocery sales fell more than 3% to 10.1%.

While the revenues are significantly below the $8.6 billion in sales from Nov. 2021, they are up from the $7.1 billion in online grocery spending in May 2022. A 7% decrease in households buying groceries online along with lower order frequency and constrained spending per order drove the November decline.

The most dramatic drop among the shoppers who receive orders via delivery, pick up, or ship-to-home was in the 60-and-older age group, and with a significant slide in the core customer segment of 30 to 44-year-olds, the survey found.

Price was a major catalyst for the lower activity, with more monthly active users (MAUs) switching from groceries to mass merchandisers. Indeed, the share of grocery customers citing cost as the top factor in their choice of where to shop online rose from 25% to 38% between August 2020, when the first survey took place, to November 2022, while the share of mass MAUs pointing to cost as the most important selection criteria remained at about 45%.

This greater focus on cost also may be influencing where and how grocery customers receive online orders and motivating some consumers to shift trips to mass outlets, especially those who already shop online with both formats, the research found. The share of grocery MAUs who also shopped online for groceries at mass outlets reached 30%, a 6% gain versus a year earlier.

“When it comes to shopping online, especially for delivery or pick up, cost considerations include more than the price paid for a basket of products,” according to David Bishop, partner in analytics and strategic insight firm Brick Meets Click.

“Many customers also evaluate the total cost associated with using the service, which can include special charges, standard fees, and tips,” he said. “And, when comparing the total of these costs to the customer, there’s a sizable gap in favor of mass versus grocery.”

There was 11% fewer grocery MAUs orders during November, while mass MAUs rose 8%. In addition, the grocery MAUs base contracted 5% over the last year while the mass base grew 6% because of the growing importance of cost and customers seeking to avoid unnecessary spending, the survey found.

Overall orders received by MAUs in November declined by about 4% because of contracting demand in the ship-to-home segment along with flat pick-up activity and a low single-digit growth in deliveries. Though aggregate spending per order across the channels was unchanged, delivery posted a 4% gain in average order value while pick up and ship-to-home registered 5% declines.

Challenges that customers expect with online grocery shopping also is impacting shopper activity. The metric, which measures the likelihood that an online grocery customer will use the same service again within the next 30 days, registered 59% for grocery and 65% for mass, with a composite repeat intent level of 62%, a 4% gain.

Grocery e-commerce platform provider Mercatus, which sponsored the research, has its own recommendations for retailers. To help boost online grocery activity, operators should consider offering a tiered fee structure based on when a customer wants to receive their order and which offers the opportunity to reduce some of the additional costs customers face when shopping online,

“We know that if offered the choice between shorter cycle times and lower fees, a significant share of online customers will select a time later that day or even the next day to save at least a couple of dollars,” Sylvain Perrier, president and CEO of Mercatus, said in a statement.

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