Regional grocers experienced a 13.5% drop in online sales for the 12-week period ending September 30, compared with the same period in 2022, according to Brick Meets Click’s eGrocery Performance Benchmarking report released Wednesday.
The Mercatus-sponsored report, which analyzed the sales of 25 U.S. grocery banners, showed that only three of the grocers reported growth in online sales. Meanwhile, larger grocers, like retail giant Walmart, enjoyed a surge in sales growth over the same period.
“These eGrocery benchmarks are extremely valuable to regional grocers who want to better understand how their banners’ performance and KPIs compare,” said David Bishop, partner at Brick Meets Click, in a statement. “This study not only helps grocers identify opportunities to improve, but also reveals the stark realities related to growing an online grocery business in a post-COVID environment where customers have greater access to and higher expectations for eGrocery shopping.”
The drop in online sales was driven in part by the trends of customers returning to in-store shopping and those moving to a rival’s online shop. The total order volume on a same-store basis declined 16.8% for the period, due to a substantial drop in active customers. The number of shoppers who completed at least one online order for the 12-week period was down a whopping 19.8% year over year.
That decline was offset partially by active shoppers completing more orders (up 7.6%) and spending more (up 4.2%) during the period, the report noted.
“Given these shifts, improving customer retention rates is vital for regional grocers. The analysis determined that it requires 2.5 new customers to replace the current value associated with one of the longest-term customers,” Bishop explained. “However, a more realistic replacement number is 3.5 new customers, given the fact that only about 30% of new customers will age to the comparable level of one lost long-term customer.”
The average order value of the long-term customers was nearly 30% higher than new online customers, and they made twice as many orders.
“Insights from this report reinforce that with customer acquisition growing ever more challenging, retention has become the name of the game,” said Sylvain Perrier, president and CEO of Mercatus. “To drive growth, grocers must invest in strategies that increase basket size and the frequency of orders. Helping online customers to save time with personalization, discover new products through intelligent promotional pairings, and get more value for money, such as through loyalty programs, are just some of the ways to ensure customers stick around.”