The U.S. online grocery market ended August with $9.9 billion in monthly sales, a 7% increase over last year as all three fulfillment methods posted year-over-year (YOY) sales growth, according to the Brick Meets Click/Mercatus Grocery Shopper Survey.
August also marked the third straight month of high single-digit sales gains for e-grocery in 2024, primarily driven by strong promotional efforts for subscription and membership programs that started in May.
“Achieving growth will only get more challenging for grocers that don’t have a competitive offering or ways to offset the discounts,” says David Bishop, partner at Brick Meets Click. “Converting a customer into a member/subscriber motivates them to buy more frequently, especially given that most firms are promoting ‘free’ delivery. Even though there’s a cost to join, explicit fees are an on-going source of friction that many shoppers want to avoid.”
Key takeaways:
- While each fulfillment method grew, delivery contributed more than half of the overall sales gains for the month, increasing 10.2% vs. last year to $3.9 billion, propelled by a continued surge in the number of monthly active users (MAUs). Ship-to-home accounted for over one-fifth of the sales gains, climbing 8.9% YOY to $1.8 billion as significantly higher average order values (AOV) more than offset flat MAU growth and a drop in order frequency. Pickup finished the month up 3.5% to $4.3 billion as moderate MAU expansion countered a pullback in order frequency and AOV finished up by 3.5% compared to last year.
- The specific impact on delivery has been even more dramatic. Compared to last year, delivery sales grew by 16.1% during the June – August period vs. just 0.6% during the March – May period. The main growth drivers between the two 3-month periods included expansion of delivery’s MAU base, which increased by 13.9% YOY during June - August vs. 4.6% during March – May, and skyrocketing order frequency, which climbed 14.9% YOY vs. a decline of 2.2% in the prior 3-month period.
“We know regional grocers are facing increased competition from retail giants like Walmart and Amazon, who can leverage huge pools of CPG ad monies to sustain aggressive promotions and capture more share of the online business,” says Mark Fairhurst, chief growth officer at Mercatus. “Regional grocers should play to their strengths in fresh foods, private label, and convenient locations while investing in targeted promotions that resonate with existing customers. Creating stronger customer connections via relevant, personalized engagement is vital for building loyalty and competing digitally today.”
