Online Grocery Sales Up in April, but Forecast Remains Choppy

As the country lapped the COVID boom in e-commerce demand—and as a vaccinated shopper base gets out into the world again—online grocery sales increased by 16% in April on a year-over-year basis, but declined by 10% sequentially from March, new data from Brick Meets Click and Mercatus shows.

The monthly figures illustrate a “choppy” trend for e-commerce that’s likely to continue through the COVID recovery and may affect retailers and their market share differently, David Bishop, partner with Barrington, Ill.-based Brick Meets Click, said in an interview with WGB following the release early May 18. Specifically, Bishop explained, grocers that gained share due to online availability in the earliest stages of the pandemic may find themselves under intense pressure to keep those shoppers through improved execution as the country reopens.

What becomes of lapsing online shoppers will be a proving ground for much discussed omnichannel strategies that may profess an indifference for the modalities consumers shop. Other shoppers may continue to shop online but switch providers: About 11% of surveyed online grocery shoppers say they are still seeking an acceptable alternative to the one they currently use.

“The idea that someone might have been online and gone back to store isn’t necessarily a negative so long as they stay within the enterprise,” Bishop said. “Obviously, as people went online early on in the pandemic it was a function of necessity, so in some cases, people shifted habits—some even radically. We have some anecdotal evidence that people who were Whole Foods shoppers before the pandemic became Walmart shoppers online simply because of the capacity issues early on in the pandemic.

“In the case of Walmart, they would have benefitted by gaining a noncustomer or a light customer last year—now the question is, how that plays out this year,” Bishop continued. “If that person prefers to shop in store, that may be a negative if they resume their pre-pandemic shopping at another retailer.”

Bishop said data from its April study showed for example a larger pullback among shoppers ages 60 and older online. “Obviously they were the first to be vaccinated, and they tend to perceive shopping as a pleasurable experience—it’s social, it’s sensory—and for those reasons, along with the relaxation of restrictions, it’s not surprising that they’re going back.”

Keeping digital shoppers online will put a premium on executing citing strategies and service that may have been overlooked or slapped together as the surge arrived a year ago, he added. The increased year-over-year volume during the month—estimated at $8.4 billion in sales, boosted by increases in the number of delivery and pickup orders by active users—indicates e-commerce remains an attractive offer for shoppers with volumes about four times the level of e-grocery prior to the pandemic.

“As we look ahead, 2021 is a very choppy and challenging year for retailers as they try to manage the next stage of the pandemic,” Bishop said. “Part of it now is what we consider a focus on executing—the implementation and integration of all the solutions that retailers now have that they now have the opportunity to catch their breath with and deploy.”

According to the survey, a growing share of the monthly active user base relied on two or more methods (pickup, delivery, and/or ship-to-home) to receive online grocery orders during April, continuing a trend that began at the onset of the pandemic. More than 35% of monthly active users received orders via two or three different methods in April 2021, up almost 3 percentage points on a year-over-year basis and 20 points higher than pre-pandemic level recorded in August 2019.

April 2021’s average order value (AOV) of pickup, delivery and ship-to-home orders dropped 6% vs. the prior year on an order-weighted basis. This drop was driven largely by a 7% decline in ship-to-home orders. Pickup and delivery AOVs dipped 1% and under 3%, respectively, but remained $8, or 10% above pre-COVID order values measured in August 2019.

The repeat intent rate, which measures the likelihood that a monthly active user will make another order within the next month with the same grocery service, jumped to 55% for April, up 5 percentage points vs. a year ago, but continues to remain significantly below pre-pandemic intent.

The April data indicating 11% of online shoppers are extremely or very likely to use another service in the next month—and a widening repeat gap between first- and fourth-time online customers also revealed by the survey—should be a wakeup call for grocers, Sylvain Perrier, president and CEO of Mercatus, said in a release.

“My message to grocery retail executives is blunt. There are no shortcuts. If you want to maximize the value of your digital investment, you also need a well-thought-out operations plan—one that can flex in response to shopper demand and help deliver a top-notch ordering and fulfillment experience," he said.