U.S. online grocery sales decline again in May

In May, U.S. online grocery sales remained elevated versus pre-pandemic levels despite a second consecutive monthly decrease, according to the latest Brick Meets Click/Mercatus Grocery Shopping Survey.

The U.S. online grocery market totaled $7 billion in May, down 16.7% from $8.4 billion in April, when sales had fallen 10% from March. Year over year, May online grocery sales decreased 15.7% from $8.3 billion in May 2020.

Delivery and pickup sales for May 2021 came in at $5.3 billion, down 19.7% from $6.6 billion in April 2021 (and the same decline versus May 2020), while ship-to-home sales were $1.7 billion, roughly the same level as in April 2021 ($1.8 billion) and May 2020 ($1.7 billion).

Although online grocery sales have shrunk, total sales in May were 3.5 times higher than pre-COVID levels, compared with $2 billion in August 2019 according to prior research, noted Brick Meets Click, a Barrington, Ill.-based strategic advisory firm focusing on digital technology’s impact on food sales and marketing.

“As the business laps very tough year-over-year comparisons, it is essential to put monthly performance into perspective and keep an eye on the big picture,” explained David Bishop, partner at Brick Meets Click. “May’s results show the market retains 70% of the incremental gains generated versus the record COVID high of $9.3 billion, illustrating that much of the gain propelled by the pandemic has stuck around.”

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Conducted May 28 to 30, the Brick Meets Click/Mercatus study surveyed 1,872 U.S. adults who participated in their household’s grocery shopping and made an online grocery purchase in the previous 30 days.

Brick Meets Click said May’s sales drop reflects declines in monthly active users, order frequency and average order value. Spending per order fell mainly because of comparisons to the pantry-loading in the early months of the pandemic last year. The weighted average order value (AOV) in May dipped 7% year over year, with delivery and pickup spending per order down 14% to $77 and ship-to-home up 4% to $50 versus May 2020.

Meanwhile, 66.8 million U.S. households purchased groceries online in May 2021, down 12% year over year. Similarly, monthly active users placed an average of 2.80 online orders, a decrease from the record high of 2.91 orders in May 2020.

The Brick Meets Click/Mercatus study revealed a shift in the mix of fulfillment methods during the pandemic year. Pickup was used by 55% of monthly active users in May, up over four points from a year earlier, whereas the share of monthly active users receiving grocery orders via delivery grew just over a point. Ship-to-home grocery orders declined six points over that time span.

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Year over year, order share grew nearly three percentage points for delivery but fell more than eight points for ship-to-home, the research showed. Pickup gained more than five percentage points versus the prior year and was the preferred method for receiving 37% of orders in May.

Almost 30% of monthly active users received online orders only via pickup in May, while another 17% received online orders only via delivery. Pickup and delivery are four and two points higher, respectively, than in May 2020, underscoring the need to provide both services to support market, Brick Meets Click pointed out.

“Usage trends signal the increased acceptability and/or value that pickup provides a grocery customer compared to delivery or ship-to-home,” according to Bishop. “Pickup not only costs the customer less, but also gives them greater control over the quality of temperature-sensitive products. Pickup has remained the dominant method since the beginning of 2021.”

The repeat intent rate — a measure of the likelihood that a monthly active user will order again in the next month with the same grocery service — came in at nearly 53% in May 2021, down four percentage points year over year. Capacity limitations have been less of an issue this year, but cross-shopping between supermarkets and mass merchants appears to be a contributing factor, Brick Meets Click reported. 

In May, the share of online customers who used both a grocery service and a mass retail service to buy groceries rose to a new high of 29%, compared with 15% pre-pandemic (in August 2019). As this trend continues, expectations of supermarket online services are being affected by comparable experiences at mass merchants, Brick Meets Click and Mercatus said.

“May’s choppiness in online sales is to be expected as the country opens, and consumers shift spending to things like travel and food away from home,” noted Sylvain Perrier, president and CEO of Toronto-based grocery e-commerce provider Mercatus. “It’s more important than ever that regional grocers focus on strengthening their competitive positioning and improving the customer experience. Retailers would benefit from segmenting their online shopper base, knowing their preferences and interests, and taking advantage of solutions that help personalize the experience and lead to larger baskets.”