Brick Meets Click report: Widening repeat-customer gap should be red flag for grocers

Overall online grocery sales were up almost a full percentage point (0.9%) year over year to $8.2 billion in April, according to the April Grocery Shopping survey by Brick Meets Click and Mercatus. 

The results of three key segments varied greatly for the month, with delivery sales up 20% from a year ago, while pickup dropped 3% and sales in the ship-to-home category dropped 19%. 

A rebound in monthly active users (MAU) paired with a higher average order value (AOV) drove the increased delivery sales, according to the report, which noted that MAUs were up 11%. That increase grew by only 1% on a two-year basis, though.  

“Over the past several years, the expansion of new delivery providers and service offerings has attracted more customers by making it both a more available and attractive way to shop, depending on the mission or occasion,” the report noted. “In addition, delivery’s AOV rose about 5% on a year-over-year basis while the other two segments experienced a pullback in spending per order versus 2022.” 

While positive average order value helped drive increased delivery sales in April, negative results in the metric led to the decline in grocery pickup sales. That drop was offset somewhat by moderate growth (in the single-digits) in MAU. The decline in ship-to-home sales was driven by a decline in all shopping metrics in that category, including double-digit declines in both AOV and order frequency, the report noted.  

“A macro view of the e-grocery market can reveal certain opportunity gaps, but it may also obscure key shopping dynamics within a particular segment of the market,” said David Bishop, partner at Brick Meets Click, in a statement. “For example, it’s difficult to see how little overlap exists between the households that use pickup and those that use delivery services or to know that pickup grew stronger in mass during April, unless you’re able to dig deeper into the segment dynamics as we do in our monthly reports.” 

It was a down month also for repeat intent metrics for two reasons that should concern grocers. The likelihood a customer will use the same service twice over the next 30 days was down 530 basis points year over year to 58%. The repeat intent rate for mass also dropped by 300 basis points and grocery was down 900 basis points. That’s the largest gap ever recorded between the two formats, according to the report.  

Even more concerning is the change in repeat intent rates by receiving method, the report warned, noting that the rate for delivery orders “not only declined more than its rate for pickup orders, but it has also dropped dramatically compared to mass delivery services.”  

“This decline, combined with the fact that delivery represents a significantly higher share of online orders for grocery than mass, highlights the importance of controlling the quality of the customer experience,” the report noted.  

It can be more challenging to guarantee a positive experience with delivery orders because third-party providers typically handle the distribution function, according to the report.  

“Given that customers vote with their wallet, the expanding gap in repeat intent between mass and grocery should be a red flag that warrants grocers re-evaluate all aspects of the customer experience,” said Sylvain Perrier, president and CEO of Mercatus, in a statement. “Customers’ expectations continue to evolve based on past experiences, which means it’s vital that grocers continue to improve the execution of various aspects, whether that’s a more personalized experience, fewer out-of-stocks or shortened wait times." 

Online spending dipped 20 basis points to 12.1% for the month compared to the same period in 2022, the report said. When excluding the ship-to-home category (most grocery stores do not provide this as an option) the contribution from pickup and delivery finished the month up roughly 40 basis points to 10%. 

The report also noted that 69% of households who did their shopping at mass did some of their shopping online in April. Those shopping in the grocery category (excluding hard discount stores) more than half (54%) shopped online some of the time. The report also revealed that nearly three-quarters (73%) who shopped with mass also ordered from a mass online service, and 52% of those who shopped at a traditional grocery store also shopped at a grocery store online. “These early findings, and others, suggest that winning online goes beyond simply competing online, which future research will examine,” Bishop said.