U.S. online grocery sales up again in May

Online grocery purchases continued to grow in May, with demand spurred by the COVID-19 crisis lifting sales 24% month-over-month to $6.6 billion, strategic advisory firm Brick Meets Click reported.

The latest gain reflected further increases in both online grocery orders and household penetration, according to the Brick Meets Click/Mercatus Grocery Survey. The study, conducted May 20 to 22, polled 1,724 U.S. adults who participated in their household’s grocery shopping within the previous 30 days.

Online grocery dollar sales growth totaled $1.3 billion in May, the same as in April, when sales jumped 37% from $4 billion in March. Underscoring the impact of the coronavirus outbreak — which led to a spurt of consumer stockpiling activity starting in late February — online grocery sales were $1.2 billion in August 19.

“COVID-19 is affecting the way people shop for groceries, and this research helps retailers to better understand where they need to invest in their online and in-store businesses,” explained David Bishop, a partner at Barrington, Ill.-based Brick Meets Click, which focuses on how digital technology and competitors are reshaping food sales and marketing.

Total online grocery orders in May rose 18% to 73.5 million from 62.5 million in April. Brick Meets Click attributed the gain to expanded capacity associated to retailers that reopened their services and/or added more delivery and pickup time slots to accommodate the upsurge in demand.

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Average monthly purchase frequency also escalated in May, up 10% to 1.7 purchases per customer from 1.6 in April. Similarly, average order value was up nearly 6% to $90 in May from $85 in April. Both trends illustrate that online grocery shopping is becoming more established among a wider base of U.S. households, Brick Meets Click said, adding that higher consumer prices beginning in April and in-stock improvements also contributed to the bigger order size in May.

About 43 million customers shopped online for groceries during the previous 30 days, raising household penetration to 33% in May from 31% in April. Increased capacity played a key role in boosting penetration, as consumers concerned about the virus found it easier to get a delivery or pickup time slot and avoid having to go inside a store.
 
“COVID-19 has accelerated online grocery adoption at a rate the industry hadn’t expected to see for years,” according Sylvain Perrier, president and CEO of Mercatus, a Charlotte, N.C.-based digital shopping solution provider. “The online surge may level off slightly as various states strive to return to ‘normal.’ However, what has changed in shoppers’ eyes is the realization of the immediate benefits of online grocery shopping.”
 
May’s research also showed a rebound in shopper satisfaction after a low in March. Of consumers polled in the May study, 56% indicated they were extremely or very likely to shop at the same online grocery venue again within the next 30 days, compared with 50% in April and 47% in March. Despite the increase, purchase intent remains well below pre-COVID rates of closer to 80%, Brick Meets Click noted.   
 
Behind the online grocery findings, a rising number of U.S. consumers are feeling the economic impact from the pandemic. The number of U.S. households reporting a dramatic drop in income of 25% or more, compared with earlier in 2020, reached almost 50 million in May. As a result, many shoppers are reining in their grocery spending by changing what they purchase, Brick Meets Click said. On a net basis, 14% of U.S. households who buy private-label reported purchasing more of these brands in May versus before the COVID-19 outbreak.

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“COVID-19 has made it clearer than ever that moving forward, trust between the retail brand and its shoppers is core to a healthy and long-term relationship,” Perrier commented. “Shoppers at every income level and demographic will continue to expect an efficient, effective and safe online order and fulfillment experience and will reward grocers who provide this with continued loyalty.”