Promotions attract online grocery shoppers, but May sales decline

Despite aggressive membership promotions by Instacart and Walmart that drove an increase in monthly active users, online grocery sales slid 0.4% in May relative to a year ago, to $6.8 billion, according to the latest Brick Meets Click/Mercatus Grocery Shopper Survey.

The decline was driven by a 6% decline in pickup order frequency combined with a slight decline in average order value. The overall monthly active user (MAU) base for pickup was up more than 3% on a year-over-year basis in May 2024 vs. a year ago, however.

Delivery, which captured 32.7% of online grocery sales in May, had sales that were essentially flat vs. a year ago, with a gain of 0.2%, although the monthly active user (MAU) base for delivery expanded in the “low teens,” according to the report. Average order value for delivery was up about 2%, but frequency declined slightly.

“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.”

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The report showed a decline in order frequency across all receiving methods — delivery, pickup, and ship-to-home — compared with a year ago.

Pickup sales dropped 3.9% in May to about $3.3 billion, compared with about $3.5 billion a year ago. Ship-to-home sales were up 9%, to $1.3 billion, and delivery was basically flat at $2.2 billion.

“While pickup ceded 178 basis points of sales share versus last year, it continued to wrestle order share away from delivery in large metro markets for the second year in a row,” the report said.

Ship-to-home captured 18.4% of all online sales in May, gaining 159 basis points of share compared with a year ago. Ship-to-home sales were driven by a 10%-plus increase in average order value and the expansion of its MAU base.

The report found that the overall online grocery MAU base was up 3% on a year-over-year basis in May. However, the total pool of households who have ever bought groceries online grew just 15 basis points, indicating that the MAU growth was driven largely by the return of previously lapsed users, the report concluded.

The expanded user base was powered by strong gains in Amazon’s pure-play services and mass merchandisers, while the supermarket sector saw its online customer base shrink vs. a year ago.

“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.