U.S. online grocery sales slip back down for May

The U.S. online grocery market continued its rollercoaster ride in May.

E-grocery sales totaled $6.9 billion for May, down 3.4% from $7.1 billion a year earlier and marking a sequential decrease of 13.4% from $8.2 billion in April, according to the Brick Meets Click/Mercatus Grocery Shopping Survey. Since dipping in January, online grocery sales have alternately increased and decreased month to month. Sales had risen 0.9% for April.

On a year-over-year basis, pickup was the only fulfillment channel posting a gain in May, with sales up 9.1% annually to $3.5 billion. The surge gave click-and-collect its largest share to date, at 50.7% of the month’s online grocery sales.

Sales were down for both other fulfillment channels, delivery and ship to home. Delivery sales fell 11.7% year over year to $2.2 billion for May—after a roughly 20% jump in April—and gave the channel a 32.5% share. Strategic advisory firm Brick Meets Click noted that ship-to-home sales, which sank 17% to $1.2 billion in May, ended up with a 16.8% e-grocery share for the month and have posted weaker results each year since 2020.

Online grocery sales represented 12.1% of total U.S. grocery spending for May, down 270 basis points year over year, said Barrington, Illinois-based Brick Meets Click, which focuses on how digital technology impacts food sales and marketing. Excluding ship-to-home sales, pickup and delivery tallied a 10% share of e-grocery spending in May, a 190-basis-point decline versus a year ago, fueled mainly by a weaker performance in delivery.

Decreases in monthly active users (MAUs) and order frequency also contributed to lower online grocery sales in May. The monthly active user (MAU) base shrank 5%—with pullbacks across fulfillment channels—while the share of MAUs using just one fulfillment method rose almost six percentage points to 72% for May.

Brick Meets Click pointed out that most retail channels also saw user declines in May, with MAU bases down nearly 2% for supermarkets down and more than 5% for mass merchants year over year. Still, the mass retail MAU base remained over 40% larger than that for supermarkets.

At the same time, the average number of orders placed by MAUs dropped 5% on an annual bases to 2.51 in May, extending a slide from a record high of 2.91 in May 2020.

“The decline in order frequency is the result of the growing number of MAUs who placed only one e-grocery order during the month,” according to David Bishop, partner at Brick Meets Click. “This accounted for one-third of all active customers and caused headwinds across all the segments.”

Conducted May 30-31 by Brick Meets Click and sponsored by grocery e-commerce specialist Mercatus, the survey polled 1,792 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.

Average order value (AOV)—excluding service charges, fees and tips—swelled by almost 8% for May compared with a year earlier, boosted in large part by grocery price inflation, Brick Meets Click reported. Pickup led the way, with a 13% gain to an AOV of $92, versus a 5% uptick to $85 for delivery. AOVs in the ship-to-home segment slipped by just over 3% on a yearly basis.

Combined, pickup and delivery AOV expanded almost 9% for supermarkets in May, yet that trailed nearly 14% year-over-year growth for mass chains.

Repeat intent, or the likelihood of an online grocery shopper to use the same service again within the next 30 days, fell 270 basis points in May compared with a year ago, the third consecutive month of declines. Supermarket repeat intent swooned by 560 basis points for the month, whereas mass retailers saw a 720-basis-points jump from a year earlier.  

“Given the decreasing number of online customers and the decline in repeat intent rates, it is imperative for regional grocers to gain a deeper understanding of their customers' evolving needs and effectively adapt,” observed Sylvain Perrier, president and CEO of Toronto-based Mercatus. “As customer expectations continue to rise, it is crucial for grocers to reassess their current service standards and ensure that the shopping experience aligns closely with these elevated expectations.”