Online grocery sales up 4% year-over-year in April; flight to mass retailers continues
U.S. online grocery sales rose to $8.5 billion in April, driven by growth across all three delivery segments.
That’s according to the most recent Brick Meets Click/Mercatus Grocery Shopper Survey, which was fielded April 29-30, 2024. The sales uplift was driven largely by the ship-to-home segment (includes orders that are received via common or contract carriers like FedEx, UPS, USPS) as overall penetration held steady and order frequency slipped compared to a year ago.
Pickup sales (orders that are received by customers either inside or outside a store or at a designated location/locker) for April 2024 grew 2.1% versus last year. Higher spending levels accounted for the gains as the average order value (AOV) climbed while order volume dropped due to a combination of fewer monthly active users (MAUs) for the service, mostly from the over 60-age group, plus lower order frequency compared to a year ago.
Delivery sales (orders received from a first- or third-party provider like Instacart, Shipt or the retailer's own employees) climbed 4.3% compared to a year ago. Sales were aided by the expansion of its MAU base as penetration increased across all age groups. The growth in the user base helped drive up order volume versus April 2023 while AOV remained essentially unchanged.
Delivery also benefited from increased focus by mass retailers, most notably Walmart, on growing their first-party delivery services, assisted by each retailer’s respective membership or subscription program.
“Delivery sales in eGrocery continue to benefit from significant interest and investment from third-party providers and Walmart,” said David Bishop, partner at Brick Meets Click. “One question related to this growth remains whether many of the newer customers who are attracted by the trial offers will behave like streaming subscription service users who choose to use one service at a time until the ‘free’ period expires, and then jump to the next special offer.”
Ship-to-home
Ship-to-home sales posted a 10.2% gain in April 2024 compared to last year. The growth was primarily due to a substantial year-over-year increase in AOV, after rebounding from a dramatic drop in AOV in 2023 versus 2022. Ship-to-Home sales were also aided by moderate expansion of its MAU base; however, order frequency fell among Ship-to-Home MAUs, leading to a decline in order volume.
Buoyed by the strong year-over-year growth, ship-to-home ended April with an 18.7% share of online grocery sales, up 100 basis points (bps) versus last year. The gain in share came from pickup, which saw its share of total sales fall to 43.0% from 44.0% in 2023 while delivery maintained its 38.3% share versus a year ago.
The size of the overall eGrocery MAU base, which encompasses all three receiving methods, held steady for April 2024 versus 2023. The share of MAUs that rely on just one method during the month remained above 70% in April, while the share that used both a Delivery and Pickup service (from any combination of banners/formats) represented only approximately 15% of MAUs after contracting again.
Mass Retailers
More online grocery customers are buying from mass as flight-to-value behavior continues and membership or subscription programs help attract delivery customers. For April 2024, Mass retailers supplied orders to 51% of the overall eGrocery MAU base, up 500 bps year over year. In contrast, Supermarket retailers engaged only 30% of the MAU base for April 2024, down 280 bps from a year ago.
The share of grocery customers (which includes both supermarkets and hard discounters) that also ordered groceries from a mass service during April 2024 surged to nearly 34%, up almost 800 bps versus April 2023. The elevated rate of cross-shopping may also be shaping customer expectations elsewhere as they compare one service to another.
The April research found that for households that primarily buy groceries from a mass retailer and also buy groceries online, 83% completed one or more eGrocery orders with their primary grocer in April 2024. In comparison, for households that primarily shop at a Supermarket and buy groceries online, just 54% bought groceries online from a Supermarket, down 640 bps versus 2023.
“Given the recent shifts in consumer purchasing patterns, especially the increased flight-to-value and rise in cross-shopping between supermarkets and mass retailers, grocery executives need to lean on their technology partners to offer solutions that enhance the shopping experience, whether that’s online or in-store,” said Mark Fairhurst, chief growth officer at Mercatus. “Mass retailers, like Walmart and Target, have already invested heavily in their mobile apps, and are now tapping into emerging technologies like machine learning and AI to better predict and adapt to customer behavior in real-time.”
About the research
The Brick Meets Click/Mercatus Grocery Shopping Survey is an ongoing independent research initiative created and conducted by the team at Brick Meets Click and sponsored by Mercatus.
Brick Meets Click conducted the most recent survey on April 29-30, 2024, with 1,704 adults, 18 years and older, who participated in the household’s grocery shopping, and a similar survey in April 2023. Results are adjusted based on internet usage among U.S. adults to account for the non-response bias associated with online surveys. Responses are geographically representative of the U.S. and weighted by age to reflect the national population of adults, 18 years and older, according to the U.S. Census Bureau.