Despite upholding its prior-year level, the U.S. online grocery market slipped back down in January after climbing back up the previous month, according to the latest Brick Meets Click/Mercatus Grocery Shopping Survey.
Online grocery sales totaled $8.4 billion for January, down 1.2% from $8.5 billion a year earlier and marking a sequential decline of 7.7% from $9.1 billion December. E-grocery sales had rebounded in December following a more than 10% drop to $7.7 billion in November.
On a year-over-year basis, pickup was the only fulfillment channel posting a gain in January, with sales up 2.5% to $4.1 billion. Delivery sales were virtually flat at $3 billion. Strategic advisory firm Brick Meets Click noted that ship-to-home sales, which sank 15% to $1.3 billion in January, drove the overall decrease in online grocery sales for the month. Declines in monthly active users (MAUs) and orders also contributed to the market dip in January.
Still, online grocery sales represented just over 12% of total U.S. grocery spending for January, up slightly from a year ago and buttressed by strong overall grocery expenditures by households, said Barrington, Illinois-based Brick Meets Click, which focuses on how digital technology impacts food sales and marketing. Excluding ship-to-home sales, pickup and delivery tallied a more than 10% share of online grocery spending.
Average order value (AOV)—excluding service charges, fees and tips—climbed 8% for pickup and 6% for delivery year over year in January. Ship-to-home AOV dropped more than 5% versus last year as monthly active users continued to adjust the role that this segment plays for receiving various types of grocery products.
Conducted Jan. 30-31 by Brick Meets Click and sponsored by grocery e-commerce specialist Mercatus, the survey polled 1,735 U.S. adults who participated in their household’s grocery shopping and made an online grocery purchase in the previous 30 days. Delivery includes retailer and third-party services (e.g. Instacart, Shipt, DoorDash), and pickup includes in-store, curbside, locker and drive-up services. Ship-to-home sales cover online grocery purchases delivered by parcel couriers like Federal Express, UPS and the U.S. Postal Service.
The online grocery MAU base shrank 1.6% year over year in January, with pickup as the only channel growing its number of users, up 1%, Brick Meets Click reported. Meanwhile, the MAU bases decreased 2% for delivery and 10% for ship-to-home. Driving the shrinkage in the overall e-grocery MAU base for January were the 30- to 44-year-olds user group (-5% from a year ago) and the age 60-and-older group (-4% from a year ago).
Mass retailers kept up their online grocery momentum in January, generating MAU growth of over 20%, whereas supermarket MAUs decreased 6%. Brick Meets Click attributed that trend in part to relative price gaps between the mass and grocery channels in the current inflationary environment.
Cross-format shopping between grocery and mass stayed at nearly 30% for the month and was up a bit year over year. Consequently, Brick Meets Click noted, about three in 10 households shopping online with a supermarket also purchased groceries online from a mass chain. Similarly, mass order activity from its MAU base rose 4% from a year ago, while supermarkets turned in order frequency growth of less than 1%.
Overall, MAUs placed fewer online grocery orders in January, continuing a longer-term, which Brick Meets Click said continued downward trend since peaking in May 2020. Fewer MAUs made at least three orders during the month, and more households made just one order.
Increased pickup and delivery AOV in the supermarket channel amounted to less than half of the 11% gain generated by mass retailers in January. Ship-to-home formats saw decreased spending per order, including a 4% AOV dip in Amazon’s pure-play services, Brick Meets Click said.
Repeat intent, or the likelihood of an online grocery shopper to use the same service again within the next 30 days, edged down two percentage points to 60% for January. Customers who buy groceries online more frequent accounted for most of the decline in repeat intent, which Brick Meets Click cited as a “troubling sign” because these shoppers spend “considerably more” per order versus customer segments buying less often.
Supermarkets trailed mass retailers by more than 14 percentage points in January—the biggest gap since this measurement began, Brick Meets Click pointed out. Currently, the repeat intent rate stands just over 50% for the grocery channel.
“This large gap in repeat intent is concerning and should raise a red flag for conventional grocers,” explained David Bishop, partner at Brick Meets Click. “While our monthly research didn’t examine the causes for the variations between grocery and mass, it could be associated with a number of variables, including product pricing, service-related costs, or differences in customer experience. So grocers may want to analyze what are the main culprits driving their respective rates lower.”
Brick Meets Click added that consumer concerns about catching flu and RSV, as well as COVID-19, motivated about 7% of the pickup and delivery MAUs in January.
“Grocers would benefit from focusing on initiatives aimed at driving repeat engagement and loyalty to grow share of wallet with existing customers,” observed Sylvain Perrier, president and CEO of Toronto-based Mercatus. “Customers now expect retailers to engage them based on their individual preferences and purchase patterns. A retailer’s first-party data is a great starting point to segment customers and develop a more personalized experience.”