Walmart, Instacart promotions boost delivery sales

Online grocery sales reached $7.7 billion in June, up 8% year over year for the month, with delivery surging, ship-to-home sales showing strong results, and pickup sales holding steady relative to last year, according to the Brick Meets Click/Mercatus Grocery Shopper Survey. 

The delivery category jumped to $2.9 billion for the month, rising 18% over the same period last year. That’s due to surges in active monthly users and increased order activity. Despite the increase, the value of orders dipped. Delivery gained 325 basis points to capture 38% of online sales in June. 

“Delivery’s strong performance in June likely benefited from the promotional offers made last month, first by Instacart and then by Walmart,” David Bishop, partner at Brick Meets Click, said in a press release. “These promotions focused on delivery and offered deep discounts on each service’s annual membership fees, which helped boost both MAUs and order frequency for delivery and for Walmart.”

Meanwhile, the pickup category remained the share leader despite dipping 352 basis points for the month compared to a year ago. The report noted that order frequency and average order volume dipped, offsetting an increased monthly average user base. 

Ship-to-home sales were up nearly 10% to $1.3 billion for the month. That’s four months in a row of gains for the category, which inched up 26 basis points to capture 17% of online grocery sales. 

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Overall, online grocery sales’ monthly active user base was up nearly 4% year over year, a result of reactivating lapsed users, according to the report. 

“In contrast, the total pool of households that have ever bought groceries online grew just 14 bps over the same period,” the report added. “The gap between these two measures highlights the fact that the increase in customers during June ’24 is largely due to less-frequent users making another order or lapsed customers who are giving the service another chance.”
 
Roughly one in three online shoppers made purchases at both grocery and mass merchandise stores in June. Nearly 32% of shoppers who made purchases from traditional grocers and non-traditional grocers directed their orders to mass merchandise retailers, specifically Walmart, which captured nearly 22%, up 150 basis points year over year. 

The repeat intent rate, which tracks the likelihood a shopper will make a second online order in a month, was down nearly seven percentage points year over year to 56%. That decline was driven by a decline in frequent users who completed four or more orders over the last three months. 

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The repeat intent rate for those frequent users was down almost 10% year over year. Grocery’s repeat intent rate dropped nearly double that of its mass merchandise counterpart, the report added. 

Mass merchandisers expanded its share of the online and in-store market in June by 190 basis points to 42% for the month compared to the same period a year ago. Traditional grocers’ share fell 250 basis points to 39%. That shift is primarily due to households making under $50,000 a year shifting to mass merchandisers. 

“Regional grocers need to stem the tide and regain market share by leveling the playing field against mass merchants, despite these rivals having a price advantage,” Mark Fairhurst, chief growth officer at Mercatus, said in the press release. “Integrating personalized and targeted promotions into their first-party platform experience will be key to re-engaging lapsed customers and improving repeat purchase rates. Additionally, incorporating high-level, in-store customer service into the digital experience – a strength that regionals are known for – will be crucial and can give them an advantage over their mass competitors.”