The U.S. online grocery market posted $7 billion in sales during May, down 16% from last May but still 3.5 times higher than pre-COVID levels, indicating online shopping retained much of the gains it made over the pandemic even as some consumer behaviors reverted.
The sales drop reflected declines in the total number of online shoppers and in the frequency of their trips, as well as a lower value per shop as consumers lapped last year’s pantry-loading activity and shopped for food at more outlets than they had a year ago, according to the Brick Meets Click/Mercatus Grocery Shopping Survey fielded May 28-30. Total online sales were the lowest since April 2020 but well ahead of $2 billion recorded in August 2019, prior to the pandemic, the firms said.
“As the business laps very tough year-over-year comparisons, it is essential to put monthly performance into perspective and keep an eye on the big picture,” said David Bishop, partner, Brick Meets Click, Barrington, Ill.. “May’s results show the market retains 70% of the incremental gains generated vs. the record COVID high of $9.3 billion, illustrating that much of the gain propelled by the pandemic has stuck around.”
The survey found that 66.8 million U.S. households bought groceries online in May, a 12% decline vs. May 2020. During the pandemic year, the mix of fulfillment methods has shifted. Pickup maintains the top position for reach and was used by 55% of monthly active users in May, up over four points vs. last year. In contrast, the share of monthly active users receiving grocery orders via delivery grew just more than one point and ship-to-home contracted six points over the same time frame.
Monthly active users placed an average of 2.80 online orders during May 2021, down slightly from the record high of 2.91 orders set one year ago. Year over year, the share of orders received via the ship-to-home segment dropped more than eight percentage points and delivery gained almost three percentage points. Pickup gained more than five percentage points vs. the prior year and was the chosen method for receiving 37% of orders in May, illustrating its growing role in serving the needs of online shoppers.
“Usage trends signal the increased acceptability and/or value that pickup provides a grocery customer compared to delivery or ship-to-home,” Bishop said. “Pickup not only costs the customer less, but also gives them greater control over the quality of temperature-sensitive products. Pickup has remained the dominant method since the beginning of 2021.”
The May survey revealed that nearly 30% of monthly active users received online orders only via pickup; another 17% received online orders only via delivery. Pickup and delivery are four and two points higher respectively than last May. These results illustrate the importance of offering both services to remain relevant and better support the total addressable market.
Spending per order dropped mainly due to the pantry loading that occurred in the early months of the pandemic. The weighted average order value in May declined 7% on a year-over-year basis.
Delivery and pickup spending per order experienced a 14% drop to $77 while ship-to-home increased 4% to $50 vs. May 2020, the firms said.
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, shrank four percentage points compared to a year ago, coming in just under 53%. While capacity constraints are less of an issue this year, the continued growth of cross-shopping between grocery and mass merchandise is likely a contributing factor to the decline.
In May, the share of online customers who used both a grocery service and a mass retail service to buy groceries during the month climbed to a new high of 29% vs. 15% pre-COVID (in August 2019). As cross-shopping climbs, expectations of grocery services are being affected by comparable experiences with mass retail services.
“May’s choppiness in online sales is to be expected as the country opens, and consumers shift spending to things like travel and food away from home,” said Sylvain Perrier, president and CEO of Mercatus. “It’s more important than ever that regional grocers focus on strengthening their competitive positioning and improving the customer experience. Retailers would benefit from segmenting their online shopper base, knowing their preferences and interests, and taking advantage of solutions that help personalize the experience and lead to larger baskets.”