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

January U.S. eGrocery Sales Reach $8.5 Billion, Up 2% Over Previous Year

The results from the Mercatus/Brick Meets Click January 2024 Grocery Shopping Survey have just been released. As usual, there are several takeaways and recommendations to consider based on the data — including how to respond to changing consumer behavior through pricing and exerting greater control over customer experience.

But before we get into that, let’s look at the overall numbers:

Top-line sales in the U.S. eGrocery market totaled $8.5 billion in January, up 1.8% compared to 2023. Despite a jump in the total number of households buying groceries online this past month, the overall sales growth was moderated by a downward trend in order frequency.

One of the biggest surprises from this month’s data has to do with eGrocery receiving formats. Ship-to-Home was the only segment to grow year-over-year as sales climbed to $1.5 billion in January:

• $4 billion in Pickup sales represented a 1.9% YOY decline.
• $3 billion in Delivery sales is a 0.5% decline from 2023.
• $1.5 billion in Ship-To-Home sales represents a dramatic 7.8% increase over last year’s numbers.

We’ll take a look at some of the contributing factors to the surprising rise for Ship-To-Home below.

January 2024 US Online Grocery Sales

Why Did Ship-To-Home Have Such A Great Month?

Fueled by an uptick in monthly active users and a 7% boost in average order value (AOV), Ship-To-Home’s popularity in January is most likely due to a combination of factors:

• Amazon’s pure-play online services improved dramatically, but this could have more to do with the large decline in Monthly Active Users (MAUs) Amazon experienced in January 2023 rather than enormous growth a year later.
• The over 60 demographic has preferred Ship-To-Home over Pickup and Delivery in the past. As health concerns — flu, COVID-19, and other respiratory ailments — tend to rise this time of year, the older demographic could be ordering from this method more frequently and contributing to its unexpected rise.

Mass Continues To Increase Its Market Share

Led by giants like Walmart, Mass Retailers continued to outshine Supermarkets. Despite a relatively flat YOY order frequency among active customers, the Mass segment expanded its overall MAU base by almost 10% while also posting a healthy uptick in AOV. This contrasts with Supermarkets, who witnessed their MAUs decrease by more than 5% as AOV also dropped off.

With more than 10% of U.S. households reporting they have less money to spend on groceries this year than they did last year, the flight-to-value shift in consumer behavior is a direct result of economic pressures.

Cross-Shopping Declines

Continuing with a trend we saw in December, cross-shopping between Mass and Grocery saw a slight decrease. Combined with an increase in the composite repeat intent rate for Pickup and Delivery services, this figure suggests that grocers are making an impact with strategies focused on customer loyalty despite some of the market-dictated shifts in consumer preferences mentioned above.

Key Takeaways from January 2024 eGrocery Sales:

• The U.S. eGrocery market reaches $8.5 billion in January 2024. This 1.8% increase from the previous year highlights a varied and nuanced market. The numbers offer some clarity on the importance of strategies around customer retention, but with specific segments and formats all capturing consumer interest differently, regional grocers need to identify where they can most effectively provide value to their customers.
• Mass retailers continue to expand their share of eGrocery sales. The flight-to-value caused by current economic conditions is continuing to play into the inherent advantages of Mass Retailers. While the cross-shopping decline of the last two months is encouraging, it remains significantly higher than pre-pandemic levels.
• The respective 1.9% and 0.5% dips in Pickup and Delivery further emphasize the flight-to-value mentioned above. Economic factors, such as the reduction in SNAP benefits and general economic pressures, are influencing consumer shopping behaviors. Retailers need to consider these factors in their pricing and marketing strategies to cater to budget-conscious consumers seeking value, but don’t forget that convenience remains a key driver.
• The composite repeat intent rate for Pickup and Delivery in January jumped 430 bps versus 2023 to 63.8%. This indicates a growing segment of consumers likely to stick with online grocery shopping because of the convenience it offers. It also further emphasizes the importance to regional grocers of maintaining control of customer experience so that these customers will keep coming back.

Strategic Recommendations

Implement an Effective Pricing Strategy

We’ve already mentioned the flight-to-value several times in our analysis of this month’s numbers — and how it’s helping Mass Retailers win an increasingly larger market share. To compete, regional grocers and independents must be ready to adapt to the way economic factors are influencing shopping habits. That means value, yes, but also convenience.

Merely promoting the same prices online as in store isn’t enough when large retailers are offering significant value on a per item basis. Besides, consumers show greater price sensitivity when considering individual items than at the transactional level when they evaluate the total cost of their online grocery orders.

This phenomenon underscores an opportunity for regional grocers and independents to shift the competitive focus from per item price to overall value by promoting the convenience being provided and working toward delivering a memorable customer experience.

Take Control of the Customer Experience

Speaking of which…

Every month, the eGrocery data emphasizes the importance of customer experience. And yet, many grocers fail to prioritize first-party engagement over third-party reliance. The best way to retain customers and keep those repeat intent rates up is by ensuring that every interaction you have with a customer reflects your brand’s values and service standards. With more control over the entire customer journey, you can also gather comprehensive data to fuel personalization and further improve that experience.

Balance Value with Convenience

January’s numbers once again reveal a broad spectrum of consumer expectations. We’ve already touched on this in the first recommendation, but the best way to meet these demands is to keep aligning convenience with cost-effectiveness. That means everything from offering a variety of delivery and pickup options to bundling products and services that keep encouraging customers to view your stores as a go-to solution for both immediate needs and planned purchases.

Keep Fighting Cross-Shopping

The tide is turning in our battle with cross-shopping. Keep at it, though. Develop compelling loyalty programs and offer exclusive products or collaborations to make your stores preferred shopping destinations. Engage customers beyond the transactional relationship of merely ordering groceries.

Closing Thoughts

Two key themes keep arising in our analysis of the numbers from this month’s Mercatus/Brick Meets Click Grocery Shopping Survey:

1. How economic factors influence consumer behavior; and
2. How varied that consumer behavior has become.

Retailers must stay agile. These themes reinforce the importance of leveraging data and insights to refine pricing strategies and retain as much control as possible to deliver an optimal experience to customers.

Thanks for reading.

For more details on this month’s eGrocery sales numbers, read the complete press release here. As always, stay tuned for next month’s analysis.