The U.S. online grocery market totaled $6.8 billion in sales for May, a 0.4% dip vs. last year. Despite a year-over-year gain in overall monthly active users (MAU), sales growth was restrained by a pullback in order frequency across all receiving methods vs. last year, according to a Brick Meets Click/Mercatus survey.
“During May, Delivery benefited from deep discounts related to annual memberships offered first by Instacart (80% off) and later in the month by Walmart (50% off),” says David Bishop, partner at Brick Meets Click. “These promotions likely drove Delivery’s strong jump in MAUs and show how players like Instacart and Walmart are attempting to keep active customers engaged by getting them to commit to 12 months instead of just one.”
“Customers appreciate the convenience of online grocery shopping, but they are increasingly looking for ways to save money as inflation has taken a toll on the household wallet,” says Mark Fairhurst, chief growth officer at Mercatus. “While digital deals are a good start, it's crucial to focus on more targeted, personalized, contextual offers based on past purchases, shopper profiles, preferences, or search behavior to better engage and retain customers.”
Key takeaways:
- Pickup sales dropped 3.9% in May vs. Last year, despite an MAU base that grew by nearly 3%. What pulled down monthly sales results was a 6% decline in order frequency combined with a slight decline in AOV. While pickup ceded 178 bps of sales share vs. last year, it continued to wrestle order share away from delivery in large metro markets where nearly 60% of U.S. households reside for the second year in a row.
- Delivery finished the month essentially flat as sales were up just 0.2% compared to a year ago; however, countering the lower order frequency rates, the segment experienced very strong growth in its MAU base, which expanded in the low teens, and its AOV rose approximately 2% vs. May 2023. Delivery grew its share of total e-grocery sales by 19 bps vs. last year to end May with 32.7%.
- Ship-to-home posted sales growth of 9%, fueled by a combination of very strong gains in average order value (AOV) – up more than 10% vs. last year – and strong expansion of its monthly active user (MAU) base. Ship-to-home captured 18.4% of all e-grocery sales during the month, gaining 159 basis points (bps) of sales share compared to May 2023.
- The overall e-grocery MAU base rose over 3% on a year-over-year basis in May vs. May 2023. However, the total pool of households who have ever bought groceries online grew just 15 bps during the month, indicating that the MAU growth was driven largely by lapsed users buying online again last month.
- In terms of where households buy most of their groceries, whether in-store or online, mass retailers increased penetration on a year-over-year basis, growing 110 bps to finish the month at 39.7%. Meanwhile supermarkets continued to hold the top spot with 41.1% despite losing 90 bps points since May last year.
