Barrington, Ill. – November 13, 2023 – The U.S. online grocery market increased by 5.0% versus last year, ending October with $8.2 billion in sales, according to the latest monthly Brick Meets Click/Mercatus Grocery Shopping Survey fielded October 30-31.
Higher average order values (AOVs), especially in Delivery, offset a slowdown in total order volume for the month. In addition, Mass continued to experience gains in its monthly active user (MAU) base, AOV, and order frequency versus a year ago, illustrating how current financial conditions are likely affecting households’ online grocery shopping behaviors.
While the number of households receiving one or more online grocery orders during October was relatively unchanged versus a year ago, formats offering Pickup and/or Delivery performed better than those offering Ship-to-Home. Pickup expanded its MAU base the most, climbing 6%, versus 2% for Delivery, and Ship-to-Home contracted by 6%.
The Mass MAU base surged, growing 29% on a year-over-year basis, continuing a “flight-to-value” type of shopping behavior which has been seen for the last several months. Grocery’s MAU base also expanded during October 2023, increasing 6% versus 2022. The over-60 age group was the largest contributor to the MAU growth for both Mass and Grocery in October.
“The Mass format, and particularly Walmart, continues to attract a larger share of MAUs as U.S. households search for ways to save money,” said David Bishop, Partner at Brick Meets Click. “The share of MAUs who bought from Mass has grown over 11 percentage points since last year, finishing at more than 50% this October.”
The total number of eGrocery orders placed during October fell by about 3% versus last year, brought down by a drop in Ship-to-Home volume and a more modest dip in Pickup orders. Delivery bucked the downward trend, growing in the month, fueled by stronger volume coming from Mass.
The topline average order value (AOV) rose nearly 9% versus last year as spending per order climbed across all three receiving methods. Delivery’s AOV posted a 10% increase, Pickup increased by 6%, and Ship-to-Home increased by 5%.
Strong growth in the cross-shopping rate between Mass and Grocery (Supermarkets plus Hard Discount) is another sign that many U.S. households may be attempting to economize.
In October, the percentage of customers who bought groceries online from both Grocery and Mass during the month set a record high, jumping 680 basis points compared to last year as over 34% of Grocery’s MAU base also shopped for groceries online with a Mass retailer.
Although the composite repeat intent rate for Pickup and Delivery in October improved to approximately 62%, up 390 bps versus 2022, Mass continued to outperform Grocery. Mass finished the month with a nearly ten point lead over Grocery, expanding its lead by 220 bps versus 2022, driven by significant improvement in repeat intent rates related to Delivery orders compared to last year.
“As today’s regional grocers focus on improving operational aspects of their online grocery services, they continue to face stiff headwinds from economic and competitive pressures,” said Sylvain Perrier, president and CEO, Mercatus.
“To mitigate these challenges, grocers should identify ways to differentiate their online shopping experience, such as highlighting private label products, amplifying personalization efforts, and/or offering unique rewards and promotions that include product sampling.”
In terms of segment performance, Delivery expanded its sales share by 260 bps in October to 40.0%, mostly due to its stronger gain in AOV during the month, while Pickup contracted 130 bps to 42.7% and Ship-to-Home shrank 140 bps to 17.3% on a year-over-year basis.
Online sales across all formats accounted for 12.5% of total weekly grocery spending during the last week of October, increasing 90 bps versus last year. The combined contribution of Pickup and Delivery, since most conventional supermarkets don’t offer Ship-to-Home, also grew 90 bps to finish the month at 10.3%.
About this consumer research
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 October 30-31, 2023, with 1,790 adults, 18 years and older, who participated in the household’s grocery shopping.
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.
Results were 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. Brick Meets Click used a similar methodology for each of the surveys conducted in 2023 – Sept. 28-29 (n=1,754); Aug. 30-31 (n=1,704); July 29-30 (n=1,795); June 29-30 (n=1,769); May 30-31 (n=1,792); Apr. 28-29 (n=1,746); Mar. 30-31 (n=1,742); Feb. 26-27 (n=1,745); Jan. 30-31 (n=1,735); in 2022 – Dec. 28-29 (n=1,715), Nov. 29-30 (n=1,749), Oct. 28-29 (n=1,732), Sept. 29-30 (n=1,752), Aug. 29-30 (n=1,743), July 29-30 (n=1,690), June 29-30 (n=1,743), May 28-29 (n=1,802), Apr. 28-29 (n=1,746), Mar. 28-29 (n=1,681), Feb. 26-27 (n=1,790), and Jan. 29-30 (n=1,793); in 2021 – Dec. 29-30 (n = 1,836), Nov. 29-30 (n=1,785), Oct. 29-30 (n=1,751), Sept. 28-29 (n=1,728), Aug. 29-30 (n=1,806), July 29-30 (n=1,892), June 27-28 (n=1,789), May 28-30 (n=1,872), Apr. 26-28 (n=1,941), Mar. 26-28 (n=1,811), Feb. 26-28 (n= 1,812), and Jan. 28-31 (n=1,776); in 2020 – Nov. 11-14 (n=2,067), Aug. 24-26 (n=1,817), Jun. 24-25 (n=1,781), May 20-22 (n=1,724), Apr. 22-24 (n= 1,651), and Mar. 23-25 (n=1,601); and in 2019 – Aug. 22-24 (n = 2,485).
About Brick Meets Click
Brick Meets Click is an analytics and strategic insight firm that connects today’s grocery business with tomorrow’s needs. Our clear thinking and practical solutions help clients make their strategies and customer offers more compelling and relevant in the changing U.S. grocery market. We bring deep industry expertise and fact-based analysis to the challenge of finding new routes to success.
Mercatus helps leading grocers get back in charge of their eCommerce experience, empowering them to deliver exceptional retailer-branded, end-to-end online shopping, from store to door. Our expansive network of more than 50 integration partners allows grocers to work with their partners of choice, on their terms. Together, we enable clients to create authentic digital shopping experiences with solutions to drive shopper engagement, grow share of wallet and achieve profitability, while quickly adapting to changes in consumer behavior. The Mercatus Digital Commerce platform is used by leading North American retailers, including Weis Markets, Save Mart brands, Brookshire’s, Kowalski’s Markets, Buehler’s Fresh Foods, WinCo Foods, Smart & Final, Stater Bros. Markets, Southeastern Grocers’ Fresco y Más, Harveys Supermarket and Winn-Dixie grocery stores among others.
David Bishop, Partner, Brick Meets Click