The U.S. online grocery market generated $6.8 billion in sales during June, down 23% vs. a year ago and 3% lower vs. May,as ship-to-home sales totaled $1.5 billion and pickup/delivery reached $5.3 billion, according to the Brick Meets Click/Mercatus Grocery Shopping Survey.
The overall sales decline, much like in May, was driven by decreases in the number of monthly active users, order frequency and spending per order. While the total market contracted, pickup’s dominance continued to strengthen, and the degree of online grocery cross-shopping between grocery and mass retail services remained near all-time highs, the survey indicated.
“We all know that the pandemic disrupted the way many U.S. households bought groceries, but it’s now becoming more evident how some retailers have more effectively changed the way they sell groceries,” said David Bishop, partner with Brick Meets Click. “When you look beyond online grocery’s monthly performance, the big picture shows which retail segments are winning market share by providing a more seamless shopping experience for their customers.”
The ongoing independent research initiative, created and conducted by Brick Meets Click and sponsored by Mercatus, found that 63.5 million U.S. households bought groceries online in June, a 12% decline from June 2020. Monthly active users declined across all age groups with the youngest (18-29 years old) and the oldest (more than 60 years old) each dropping by more than 15%. The core customers (30-44 years old) dropped by 6%. Pickup’s monthly average user base jumped by almost 16% on a year-over-year basis, while delivery’s base declined 1% and ship-to-home’s base experienced a drop of 6%.
During June 2021, monthly active users placed an average of 2.7 online orders, down 6% from 2.89 orders one year ago. The share of orders received via pickup grew nearly 7 points on a year-over-year basis, capturing 42% of total order share as delivery and ship-to-home experienced 2- and 4-point drops in share, respectively.
This research also looked at the variation in how households shopped online for groceries by geo-coding responses via ZIP code into one of four market types based on population size. During June 2021, pickup regained the top share in large metro markets and once again became the dominant method across all four market types, growing monthly order share in all market types vs. last year. In comparison, ship-to-home’s order share shrank across all market types, and delivery’s order share grew only slightly in the least populated markets on a year-over-year basis.
The June 2021 results also revealed that 33% of monthly active users received online grocery orders only via pickup; another 16% received online grocery orders only via delivery. From a broader perspective, pickup’s overall usage rate for June 2021 was nearly 5 percentage points higher vs. last year and over 23 points higher compared to August 2019. These results illustrate the importance of offering both services—but especially pickup—to remain relevant and to better support the total addressable market for online grocery services.
Spending per order shrank as the weighted average across all three receiving methods declined nearly 7% in June 2021 vs. a year ago, mostly driven by a drop in delivery’s average order value that exceeded 11%. Compared to pre-pandemic spending levels, June 2021’s average order values remained elevated, with delivery up 6%, pickup up 12% and ship-to-home up 14% vs. August 2019.
The repeat intent rate, which measures the likelihood that a monthly active user will order again in the next month with the same grocery service, jumped to 60%, up 4 points compared to a year ago. While this is a positive trend, there is a heads up for grocery retailers: The repeat intent rate for mass retailers, like Walmart and Target, was almost 9 points higher on average compared to grocery’s repeat intent rate during June 2021.
The comparisons between grocery and mass remained extremely relevant as the share of online customers who used both a grocery service and a massretail service to buy groceries during the month exceeded 28% for the second straight month. In fact, the ongoing research illustrates how a mass rival could now be a grocery retailer’s primary competitor when it comes to online grocery, as the cross-over shopping rate was only 15% pre-COVID (in August 2019).
“Given June’s results, it’s hard to deny U.S. consumers’ clear preference for pickup services in all market types,” said Sylvain Perrier, president and CEO of Mercatus. “Regional grocers looking to solidify their sales gains also confront a more competitive environment. The mass merchants and third-party delivery services are all looking to protect their share of online wallet. One clear action grocers should take is to double-down on modeling your repeat online customers shopping preferences, and develop a reengagement strategy that plays to your retail brand’s unique strengths. Second, invest both in the technology and realignment of your operating models so you can improve the overall customer pickup experience at a lower cost to your business.”