The U.S. online grocery segment jumped 31% vs. last year, ending February with $10.3 billion in monthly sales, according to the Brick Meets Click Grocery Shopper Survey, sponsored by Mercatus.
“We are a little more than a half year into e-grocery’s current growth curve, fueled by aggressive offers to lock in customers for at least 12 months,” says David Bishop, partner at Brick Meets Click. “So far, the response from U.S. households reveals a sizable amount of latent demand that has been unlocked by offering discounts designed to help customers save more money on online grocery orders.”
Key takeaways:
- February marked the seventh straight period where monthly sales exceeded $9.5 billion and the ninth consecutive period with positive year-over-year sales growth, starting shortly after deeply discounted offers on annual membership and subscriptions began being promoted.
- Delivery continued to post extremely strong results for February, growing more than 45% vs. a year ago and registering $4.5 billion in sales. A surge in monthly active users (MAUs) was the predominant growth factor, driven mainly by the rapid expansion of users in the 60-plus age group and a YOY rebound in penetration with 18-29-year-olds. Strong gains in order frequency and average order values (AOVs) also contributed to this robust performance, enabling delivery to finish the month with nearly 44% of e-grocery’s total sales.
- Pickup reported very strong gains for February, climbing 19% vs. last year, to approximately $4.1 billion in sales. Pickup’s MAU base and order frequency rate both grew YOY, but the primary driver of sales growth was a higher AOV; however, pickup’s AOV, MAU base, and order frequency all increased at slightly slower paces than delivery’s. Despite the monthly sales gain, pickup’s share of total e-grocery sales fell 400 bps vs. last year, closing February with just over 39%.
- Ship-to-home sales jumped nearly 29% vs. the prior year as this method posted almost $1.8 billion in sales. Ship-to-home’s YOY gains were driven by a surge in MAUs, which may have been fueled partly by the current in-store environment where various categories are merchandised behind locked plexiglass doors to prevent theft. While ship-to-home order frequency and AOV also climbed vs. last year, the gains were more muted than those for delivery. Overall, ship-to-home essentially maintained its 17% share position, ceding just 30 bps of share compared to a year ago.
- Supermarket and mass retailers also had a positive February. Both posted year-over-year gains across the three core drivers of top-line sales: MAUs, order frequency, and AOV.
“Regional grocers are converting first-time shoppers into more loyal customers as evidenced by the rising repeat intent rates, but so is Walmart” says Mark Fairhurst, chief growth marketing officer, Mercatus. “While deep discounts have driven a lot of trial, making a good first impression is essential to longer-term success. That means providing a more seamless shopping experience by pairing relevant personalized offers, order fulfilment, and sought-after loyalty rewards to encourage customers to shop online again.”
