US eGrocery Sales Trends with Brick Meets Click – August 2024 Insights

August US eGrocery Sales Reach Nearly $10 Billion

According to the latest Brick Meets Click/Mercatus Grocery Shopper Survey, August 2024’s US eGrocery sales reached $9.9 billion, reflecting a 7% increase compared to the previous year.

This marks the third consecutive month of growth in online grocery sales, driven largely by aggressive discounts on delivery services from major players like Walmart, Instacart, and Amazon. These deep discounts are part of a promotional strategy to boost signups for subscription and membership plans.

The data from this month’s report reveals that all three fulfillment methods—delivery, ship-to-home, and pickup—saw year-over-year growth. However, it was delivery leading the charge, contributing more than half of the overall sales gains for the month.

• Delivery sales increased 10.2% to $3.9 billion.
• Pickup sales were up 3.5% to $4.3 billion.
• Ship-to-home sales climbed 8.9% to $1.8 billion.

Keep reading below for a full analysis of these numbers and other data points from the report, including actionable advice for regional grocers on investing in perimeter departments, moving away from third-party platforms, and leveraging customer data for personalized marketing.

August 2024 US Online Grocery Sales Analysis

The Continued Impact of Delivery Discounts

August’s strong sales performance can once again be directly linked to the ongoing promotional activities of Walmart, Instacart, and Amazon.

The significant delivery discounts to promote their membership programs have proven highly effective—increasing delivery’s MAU base by nearly 16% year-over-year (YOY), compared to a 6% increase for overall eGrocery.

To illustrate delivery’s remarkable growth, we can compare the receiving method’s key metrics from June – August of this year to the previous three-month period:

• Sales grew 16.1% compared to 0.6%.
• MAUs increased by 13.9% versus 4.6%.
• Order frequency climbed by 14.9% in contrast to a decline of 2.2%.

The deep discounts are not only boosting immediate sales, but actually shifting consumer behavior and expectations. It’s also raising questions as to whether or not this growth in delivery can be sustained.

Regional Grocers Need Quick Wins & Long-term Growth

While these offers won’t last forever, grocers need to think about what they can do to better compete right now and once these promotions run their course.

Investing in perimeter departments and focusing on fresh, higher-margin products are effective strategies for regional players that can be implemented immediately. However, it’s equally crucial to focus on building long-term customer loyalty through personalized marketing, reducing reliance on third-party promotions, and leveraging customer data to improve the overall customer experience.

By further developing first-party services and strengthening customer relationships, regional grocers can create a sustainable competitive edge that endures beyond the current wave of aggressive discounting.

We Need to Talk About the Walmart in the Room

Delivery’s sales numbers aren’t the only beneficiary of the discounts on offer.

Walmart has seen significant gains in monthly active users (MAU), with its base expanding by 9% over last year, compared to the 6% YOY growth of the MAU base for all of eGrocery.

But that’s not all. Walmart’s dominance is extending beyond online sales. Over the past three months, the share of US households that primarily shop for groceries at Walmart—either in-store or online—has risen to 30%.

In addition to offering its substantial delivery discounts, Walmart is converting more customers into loyal members of its ecosystem by leveraging:

• Private label brands,
• Targeted promotions for specific customer segments, and
• A vast retail media network.

These strategic moves are making Walmart the default choice for online grocery shopping, as customers become increasingly locked into its services.

10 Key Takeaways from August 2024 eGrocery Sales:

• The US eGrocery market reached $9.9 billion in August 2024, marking a 7% increase YOY.
• Delivery sales grew by 10.2% versus last year, driven by aggressive promotional efforts from major players like Walmart, Instacart, and Amazon.
• Ship-to-Home sales rose by 8.9%, supported by higher average order values (AOV) despite flat MAU growth.
• Pickup sales increased by 3.5%, with moderate MAU growth balancing out declines in order frequency and AOV.
• The overall MAU base for all of eGrocery grew by 6% YOY in August.
• Delivery’s MAU base expanded by nearly 16% since last year, three times faster than Pickup’s MAU growth.
• Overall eGrocery order volume increased by approximately 5% YOY, with Delivery orders growing significantly.
• The likelihood of customers reusing eGrocery services within the next 30 days dropped significantly in August, indicating potential retention challenges.
• Walmart’s MAU base grew by approximately 9% compared to last year, benefiting from its aggressive promotional strategy.
• The share of US households that primarily shop for groceries at Walmart increased to 30% in the past three months.

Strategic Recommendations for Grocers

Invest in Perimeter Departments

Regional grocers should focus on enhancing their fresh produce and other perimeter departments as a key strategy to differentiate themselves from retail giants like Walmart.

In the latest episode of US eGrocery Sales Trends, Mark Fairhurst, Chief Growth Officer at Mercatus, shares a conversation he had with a retailer who noted how his household increasingly relies on delivery services for center aisle products.

The national brands, packaged goods, and pantry staples found in the center aisles of a supermarket are often more convenient to order online and are decidedly less expensive when purchased from larger retailers. However, the same consumers ordering these items online will often seek out regional grocers for fresh produce, deli items, bakery goods, and other higher-margin, quality-focused products.

Investing in and promoting these perimeter departments can help regional grocers stand out to the many customers who prioritize quality over price for these specific categories, offering them something big-box competitors struggle to match.

Take Pages from the Mass Merchant Playbook

Because it reflects the impact of delivery discounts so vividly, the data from this month’s US eGrocery sales offers insights into the strategies used by major retailers like Walmart.

Regional grocers should take advantage of this by adopting and adapting mass merchant tactics to better compete:

Leverage Retail Media Networks:
Regional grocers can generate additional revenue by turning their digital real estate into advertising opportunities for consumer packaged goods brands. While Walmart’s retail media network is enormous, regional grocers have an advantage in being able to offer a highly targeted, loyal audience to these brands.

Develop Targeted Subscription Models:
Following the lead of big retailers using discounted delivery to promote membership plans, regional grocers can introduce monthly or annual subscription services that offer benefits like free pickup or other discounts that drive sales without damaging profitability.

Promote Your Private Label Brand:
To counter the dominance of larger retailers in center aisle sales, regional grocers can focus on their own private labels. Offering quality products at a discounted price from national brands—which has been highly effective for Walmart—can keep customers from cross-shopping for their packaged goods with big retailers.

Use Customer Data for Personalized Marketing

With all the attention on delivery driving eGrocery sales, there’s one important data point that might have been overlooked: The likelihood of customers reusing eGrocery services within the next 30 days dropped significantly in August.

This puts the onus on grocers to enhance their customer loyalty efforts. The most cost-effective way to do this is by using the data collected from their first-party services to develop personalized marketing strategies.

That means tailored promotions, targeted offers, and subscription models that cater to specific customer needs. Automated personalized marketing can help grocers build stronger, more lasting relationships with their customers.

Closing Thoughts

This month’s sales report highlights the significant impact of strategic promotions on the growth of online grocery sales, particularly in the delivery segment.

As big retailers draw more customers, regional grocers must play to their strengths in fresh produce and personalized customer engagement to compete effectively. By focusing on long-term strategies that build customer loyalty and leveraging technology to enhance the shopping experience, grocers can meet the immediate challenges of deep delivery discounts and continue to grow long after these offers have ended.

As always, thank you for reading. If you have any questions related to this month’s report, please don’t hesitate to contact us.

For more information related to the Brick Meets Click/Mercatus August 2024 Grocery Shopping Survey, read the full press release.