Having largely addressed many of the issues that interfered with the potential to meet surging demand a year ago and improved flexibility behind expanded local pickup options, online grocery merchants saw record-tying monthly sales in March and much improved intent to continue shopping this way, according to the Brick Meets Click/Mercatus Grocery Shopping Survey.
Federal stimulus payments arriving during the month may have also played a role in the sales round, according to David Bishop, partner with Brick Meets Click, the Barrington, Ill.-based industry consultant.
Sales jumped by 43% during the month to $9.3 billion, according to the survey of U.S. consumers that took place March 26-28. Online sales last March totaled $6.5 billion.
A year ago, online grocery shoppers faced a range of challenges, including out-of-stocks and insufficient order slot capacity, which degraded the overall experience and led to repeat intent rates plummeting to less than 43%. Retailers have largely overcome these issues and the effect is evident as they indicated “likelihood to use a specific service again,” came in at 62%.
The growth in sales came despite 5 million fewer grocery shoppers online this March as compared to the same month in 2020, the survey indicated. The 7% drop in grocery shoppers online (from 774.5 million last year to 69.3 million this year) is represented nearly entirely by a reduction in grocery shoppers using “ship-to-home” solutions—primarily Amazon—for their grocery needs, offset by increases in click-and-collect and local delivery. This is a significant shift since last year and illustrates the progress local grocers have made in broadening their businesses to serve omnichannel shoppers.
“One hypothesis behind the decline in ship-to-home is that COVID-19 has altered the perceived value of shopping this way and grocery pickup and delivery are both contributing factors for that shift,” Bishop told WGB in email comments. “So, while ship-to-home is still for receiving those hard-to-find favorite products as opposed to driving all around town in search of them, the allure of buying other products this way has lessened as more households see the benefit of adding those to a delivery or pickup order.”
Target’s recent discontinuation of its product subscription service—while it increases more flexible shopper options like store pickup and delivery—is one such example of a pullback in ship-to-home, Bishop added.
In terms of monthly users, the ship-to-home segment lost 27% of its monthly users on a year-over-year basis, while the pickup segment gained 12% and delivery gained 23%.
A year ago, ship-to-home captured the largest share of orders. Over the past year, it has ceded nearly 19 percentage points of order share to the delivery and pickup segments. Today pickup is the dominant way online orders are received in the U.S., the survey indicated.
“Over the last 12 months, consumers’ dramatic shift to online grocery shopping has solidified, with curbside pickup attracting the largest share of monthly shoppers at 53% compared to ship-to-home and delivery,” Sylvain Perrier, president and CEO of Mercatus, the Toronto-based provider of grocery e-commerce solutions, said in a statement. “In fact, pickup continues to have stronger consumer demand across all market types compared to delivery. Those brick-and-mortar chains that have invested in optimizing pickup services likely will continue to benefit from the high repeat intent rate as indicated in the data.”