Online channel builds share of U.S. grocery market in 2021

Fueled by a 3.5% monthly gain in December, U.S. online grocery sales reached nearly $98 billion last year, according to the latest Brick Meets Click/Mercatus Grocery Shopping Survey.

For 2021, the online grocery market totaled $97.7 billion in sales via pickup, delivery and ship-to-home channels, as more than 70% of U.S. households, or 93 million, received one or more orders during the year, strategic advisory firm Brick Meets Click reported Tuesday. 

December online grocery sales rose to $8.9 billion (including $7.1 billion from pickup/delivery and $1.8 billion from ship-to-home) from $8.6 billion in November ($7 billion pickup/delivery and $1.6 billion ship-to-home). Sales in December represented the second-highest monthly total in 2021, after the $9.3 billion generated last January and March. More than 69 million households ordered groceries online in December, compared with less than 69 million in November.

Online grocery garnered a nearly 13% annualized share of total grocery spending in 2021, up almost two percentage points from 2020. Brick Meets Click said that excluding ship-to-home — an option not offered by most grocery retailers — the online channel through pickup and delivery accounted for 10% of overall grocery sales last year, marking growth of two percentage points versus 2020.

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Although most grocery retailers enlisted third-party delivery platforms when entering the e-grocery arena, the United States stands as a pickup-dominant market, except in some of the largest urban markets, where delivery overtook click-and-collect for the first time in December 2021, Brick Meets Click noted. During 2021, the pickup channel grew its share of online sales by 5% year over year to 45%, whereas delivery saw roughly flat share growth at 33% and ship-to-home share declined five percentage points to 22%.   

“If retailers are surprised by these results, it’s likely because they are missing a broader view of how and where customers are shopping online for groceries,” explained David Bishop, partner at Barrington, Ill.-based Brick Meets Click, which focuses on how digital technology impacts food sales and marketing. “Even before the pandemic started, pickup was preferred over delivery. Then in April 2020, pickup took the top spot away from ship-to-home, and it’s kept that spot ever since.” 

Fielded Dec. 29 and 30 by Brick Meets Click, the study polled 1,836 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), while pickup includes in-store, curbside, locker and drive-up services. Ship-to-home sales cover online grocery purchases delivered via parcel couriers like Federal Express, UPS and the U.S. Postal Service. The national research has been conducted by Brick Meets Click since 2016 and sponsored by Mercatus since May 2020.  

Related:November online grocery sales hit $8.6 billion, up 6% from year ago

During 2021, the average number of online grocery orders placed by monthly active users (MAUs) came in at 2.74 per month, down 1% from 2020. However, Brick Meets Click pointed out, volatility in 2021’s monthly order frequency fell 60% versus 2020 levels, indicating that buying patterns are becoming more entrenched at an elevated level — 35% higher than pre-pandemic levels.

Mass merchants also remain a tough competitor to supermarkets and other grocery retailers in the online space. In December, the share of grocery’s MAUs who also placed at least one online order with a mass merchant climbed 29.1%, record high for this shopper metric, Brick Meets Click said. Among those households, research showed that cross-shopping rose sharply with Target but dipped for Walmart, with the gap between the two retailers shrinking to the smallest it has ever been, at two-and-a-half percentage points.

“The state of online grocery in the U.S. today underscores not only the need for grocers to compete online for sales, but also the imperative to develop and implement more sound strategies that improve profitability as sales growth becomes more challenging,” stated Sylvain Perrier, president and CEO of Toronto-based grocery e-commerce provider Mercatus. “In this regard, putting customer satisfaction at the center of the shopping experience is paramount and requires implementing an operational process that is not only efficient for the retailer but also caters to customers’ demand for quality and convenience.”