Pickup sales slip year-over-year while Delivery holds steady, likely aided by strong promotional activity aimed at locking customers into annual membership plans.

Topline

The U.S. online grocery market totaled $6.8 billion in sales for May 2024, a 0.4% dip versus last year according to the Brick Meets Click/Mercatus Grocery Shopper Survey fielded May 30-31, 2024.

Despite a year-over-year gain in overall monthly active users (MAU), sales growth was restrained by a pullback in order frequency across all receiving methods versus last year.

“During May, Delivery benefited from deep discounts related to annual memberships offered first by Instacart (80% off) and later in the month by Walmart (50% off),” said David Bishop, partner at Brick Meets Click. “These promotions likely drove Delivery’s strong jump in MAUs and show how players like Instacart and Walmart are attempting to keep active customers engaged by getting them to commit to 12 months instead of just one.”

Performance by Receiving Method

Pickup sales dropped 3.9% in May ’24 versus ’23, despite an MAU base that grew by nearly 3%.

• What pulled down monthly sales results was a 6% decline in order frequency combined with a slight decline in AOV.
•  While Pickup ceded 178 bps of sales share versus last year, it continued to wrestle order share away from Delivery in Large Metro markets where nearly 60% of U.S. households reside for the second year in a row.

Delivery finished the month essentially flat as sales were up just 0.2% compared to a year ago.

• However, countering the lower order frequency rates, the segment experienced very strong growth in its MAU base, which expanded in the low teens, and its AOV rose approximately 2% versus May 2023.
• Delivery grew its share of total eGrocery sales by 19 bps versus last year to end May with 32.7%.

Ship-to-Home posted sales growth of 9.0% year-over-year.

• This growth was fueled by a combination of very strong gains in average order value (AOV) – up more than 10% versus last year – and strong expansion of its monthly active user (MAU) base.
• Ship-to-Home captured 18.4% of all eGrocery sales during the month, gaining 159 basis points (bps) of sales share compared to May 2023.

Overall MAU base grows – Mass up and Supermarkets down

The overall eGrocery MAU base rose over 3% on a year-over-year basis in May ’24 versus May ’23.

•  In contrast, the total pool of HHs who have ever bought groceries online grew just 15 bps during the month, indicating that the MAU growth was driven largely by lapsed users buying online again last month.
• The expansion was powered by strong gains in Amazon’s pure-play services and Mass (across all three delivery methods) while the Supermarket format’s online customer base contracted versus a year ago.

Cross-shopping rates remain elevated

For May 2024, cross-shopping remained elevated as 3 in 10 customers bought online from both Grocery and Mass during the past month.

• The share of Grocery customers (which includes both Supermarkets and Hard Discounters) that also received an online grocery order from a Mass retailer in May 2024 increased by 510 bps to 31.5% this year.
• Also, the cross-shop rate between Grocery and Walmart climbed versus last year, reaching nearly 20% for May 2024.

Repeat intent rates trend down

• The likelihood that a customer will complete another online order next month with the same eGrocery service used most recently fell over two percentage points to 57.8%, driven by a drop in repeat intent rates for the 30 - 44 age group, the heaviest users of these services.
•  The Grocery format fueled the overall decline as it dropped five-percentage points while the Mass format repeat intent rate remained essentially unchanged between May 2023 and 2024.

Primary Format that Household (HH) Shops at for Groceries in Past Month

•  In terms of where households buy most of their groceries, whether in-store or online, Mass retailers increased penetration on a year-over-year basis, growing 110 bps to finish the month at 39.7%. 
•  Meanwhile Supermarkets continued to hold the top spot with 41.1% despite losing 90 bps points since May last year. 

Message from Research Sponsor - Mercatus

“Customers appreciate the convenience of online grocery shopping, but they are increasingly looking for ways to save money as inflation has taken a toll on the household wallet,” said Mark Fairhurst, Chief Growth Officer at Mercatus. “While digital deals are a good start, it's crucial to focus on more targeted, personalized, contextual offers based on past purchases, shopper profiles, preferences, or search behavior to better engage and retain customers.”

About this consumer 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 May 30-31, 2024, with 1,724 adults, 18 years and older, who participated in the household’s grocery shopping, and a similar survey in May 2023 (n=1,792).   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.

The three receiving methods for online grocery orders are defined as follows:

• Delivery includes orders received from a first- or third-party provider like Instacart, Shipt or the retailer's own employees.
• Pickup includes orders that are received by customers either inside or outside a store or at a designated location/locker.
• Ship-to-Home includes orders that are received via common or contract carriers like FedEx, UPS, USPS, etc.

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