Online grocery sales grow again in November

Delivery proved to be the main driver behind the November sales gain, but pickup remains the largest fulfillment channel, Brick Meets Click said. / Photo by Russell Redman

U.S. online grocery sales have turned back onto a year-over-year growth track after a mostly rollercoaster year.

E-grocery sales totaled $8.1 billion for November, up 5.2% from $7.7 billion a year earlier and, along with a 5% gain in October, marking the second month of annual increases after a 3.1% yearly decrease in September, according to the latest Brick Meets Click/Mercatus Grocery Shopping Survey, released Thursday.

During the last week of November, online sales represented 11.7% of total weekly grocery spending, up 160 basis points from a year ago, said Barrington, Illinois-based Brick Meets Click,which focuses on how digital technology impacts food sales and marketing. The combined contribution of pickup and delivery—since most conventional supermarkets don’t offer Ship-to-Home—also grew 130 basis points to close out the month at 9.8%, the strategic advisory firm added.

So far in 2023, the biggest year-over-year gain for online grocery sales came in August (+8.7%). That followed three months of annual decreases (-7% in July, -1.2% in June, -3.4% in May) and then alternating yearly increases and declines in April (+1%), March (-7.6%), February (+1.5%) and January (-1.2%).

The trend also has been up and down on a sequential basis. For example, this year’s largest online grocery sales total of $9.3 billion in August was followed by a 19.4% month-over-month drop to $7.5 billion in September, a 9.3% gain to $8.2 billion in October and then a 1.2% dip to $8.1 billion in November.

Delivery proves growth driver

On the fulfillment side, November’s e-grocery results were fueled by delivery, which saw sales rise 8.6% year over year to $3.2 billion, driven mainly by strong gains in its monthly active user (MAU) base, the survey showed. The latter trend helped hoist order volume by 7.5%, even with just a 1% uptick in average order value (AOV), Brick Meets Click noted. That in turn grew delivery to almost 33% of all online grocery sales in November, up 250 basis points from a year earlier—also aided by Walmart’s expansion of its own delivery service plus a hike in online membership and subscription offers by national grocers and third-party providers, the advisory firm said.

Pickup remained the largest online grocery fulfillment channel in November, though sales rose only 1.6% year over year to $3.6 billion, boosted by an AOV increase of 11.8%. Brick Meets Click said the growth was partially by a modest decline in click-and-collect’s MAU base and lower order frequency, which pulled down order volume by 9.2% versus last year. Pickup’s penetration among all age groups fell on an annual basis in November—“although the reasons for the broad decline are unclear,” Brick Meets Click said—and the channel ceded 350 basis points of share versus a year ago, despite maintaining its share lead at 38% for the month.

From Brick Meets Click

Meanwhile, solid MAU growth in Amazon’s pure-play services helped ship-to-home sales climb 7.6% for November. While order frequency softened, the MAU growth led to a nearly 3% gain in overall order volume for the channel, which also got a lift from a 4.5% increase in AOV. Ship-to-Home finished the month at 29% of e-grocery sales, up 110 basis points year over year.

Conducted Nov. 29 to 30 by Brick Meets Click and sponsored by grocery e-commerce specialist Mercatus, the survey polled 1,814 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.

Mass retailers keep pressure on supermarkets

On the competitive front, supermarkets have been grappling with challenges presented by mass retail chains in both the online and brick-and-mortar realms, according to David Bishop, partner at Brick Meets Click.

“The current economic realities and omnichannel strategies are aiding mass retailers in attracting more customers today,” Bishop explained. “The price advantage that a mass rival, such as Walmart, enjoys is motivating cash-strapped households to shift where they shop, and mass customer engagement strategies are making it easier for those customers to shop the way they want.”

In November, 42% of U.S. households used a mass retailer for most of their in-store or online grocery purchases, or 390 basis points higher than supermarkets—a reversal since May 2023, when 42% of households reported using supermarkets as their primary store versus 39% for Mass, the Brick Meets Click/Mercatus research revealed. Households who shopped for groceries mainly at Walmart during November also were more likely to shop online for groceries—and to do so at Walmart.com—compared with households who shopped primarily at a supermarket.

Mass chains, too, saw continued strong growth in their MAU base, which expanded 14% year over year in November versus a 14% contraction for supermarkets, Brick Meets Click said. Both retail channels reported lower order frequency among their MAU bases, each shrinking around 5%. In AOV, mass retailers generated a 9% annaul increase across delivery and pickup services for November, besting the 5.6% gain for supermarkets.

Brick Meets Click pointed out that the elevated levels of cross-shopping between mass chains and grocery (i.e. supermarkets plus hard-discount grocers) highlight the challenges facing customers and retailers. In November, the percentage of households who purchased groceries online from both grocery and mass rose 300 basis points year over year, resulting in 33% of grocery’s MAU base also shopping for groceries online with a mass shopping service.

Repeat intent, or the likelihood of an online grocery shopper to use the same service again within the next 30 days, improved 140 basis points year over year in November to 63.6% for pickup and delivery combined. The mass retail channel, however, expanded the gap with grocery. Mass tallied a nearly 19-point lead for the month with a 630-basis-point rise in its repeat intent rate, compared with a 690-basis-point decline by grocery, Brick Meets Click reported.

“Considering the challenges regional grocers face today in acquiring and retaining customers, it’s worth recalling the phrase ‘a bird in the hand is worth two in the bush,’” stated Sylvain Perrier, president and CEO of Toronto-based Mercatus. “This adage underscores the importance of paying closer attention to current customers’ expectations for online services and then delivering the kind of experience they want. While easier said than done, it requires a clear strategy and plan to execute.”