The ship-to-home grocery segment experienced the largest year-over-year sales contraction in March
Delivery is fueling online grocery sales.
Total U.S. online grocery sales were down 6% in March to $8.7 billion versus March 2021’s record high of $9.3 billion, according to the Brick Meets Click/Mercatus Grocery Shopping Survey. Total sales for the first quarter of 2022 ($8.5 billion in January and $8.7 billion for both February and March) finished just 2.5% lower compared to a year ago.
The year-over-year performance across the three eGrocery segments varied as the online grocery market continues to evolve.
The ship-to-home segment experienced the largest year-over-year sales contraction in March, plummeting over 30% to $1.4 billion, down from $2.1 billion in March 2021. The decline was driven by a 13% reduction in the number of orders placed by monthly active users (MAUs) combined with a 23% drop in the average order value (AOV).
Grocery pickup sales declined almost 11% in March from $4.3 billion in 2021 to $3.8 billion in 2022, affected by similar factors but to different degrees. Order frequency for pickup declined 8% while AOV dipped less than 4% versus the prior year.
In contrast, delivery reported strong sales growth for March, surging over 20% on a year-over-year basis from $2.9 billion to $3.5 billion. The number of orders placed by MAUs climbed by 13% and AOV rose 7% versus 2021. (Delivery includes orders received from a first- or third-party provider like Instacart, Shipt or the retailer's own employees.)
“Two factors continued to drive delivery’s strong performance in March,” said David Bishop, partner at Brick Meets Click. “First, the aggressive expansion of third-party providers into grocery is enabling additional ways for people to shop online. And second, newer services focused on faster cycle times are appealing to a broader range of trip missions and usage occasions.”
• Cross-shopping between grocery and mass gained momentum as the share of grocery’s MAU base that also shopped online with mass during the month increased nearly 4 percentage points versus last year, finishing at 29% for March 2022.
• The likelihood for an online grocery shopper to use the same service again within the next month also increased during March, climbing to almost 64%, up 1.4 percentage points on a year-over-year basis. Analyzing month-over-month results showed that March repeat intent rates at mass providers improved 8 points while Grocery’s intent rates lost more than 5 percentage points versus February 2022.
• On a quarterly basis, total eGrocery sales for the first quarter of 2021 were just 2.5% lower than the year-ago period, with ship-to-home down 29%, pickup down 2%, and delivery up 15%. Ship-to-home ceded 6 points of market share to delivery while pickup, the dominant segment, held steady.
During the first quarter of 2022, ship-to-home finished with 17% of eGrocery sales. Pickup’s share remained essentially unchanged at 46% and delivery accounted for 38%.
“A key takeaway from March’s report is that online grocery sales have retained much of the gains from a year ago, proving the resilience of grocery eCommerce,” said Sylvain Perrier, president and CEO, Mercatus. "Even so, conventional grocers need to develop and strengthen their first-party web and mobile channels, leverage third-party solutions to fill in the gaps, and excel at executing the services they offer.”
In terms of share of wallet, total eGrocery finished the quarter at 13.1%, down from 13.7% last year. Excluding ship-to-home (since most conventional grocers don’t offer this service) reveals that the combined delivery and pickup share has grown around 40 basis points, accounting for 10.9% of total grocery spending during the first quarter.
The Brick Meets Click/Mercatus Grocery Shopping Survey is an ongoing independent research initiative created and conducted by Brick Meets Click and sponsored by Mercatus. Brick Meets Click conducted the survey on March 28-29, 2022, with 1,681 adults, 18 years and older, who participated in the household’s grocery shopping.