US eGrocery Sales Trends with Brick Meets Click – July 2024 Insights
July U.S. eGrocery Sales Climb to $7.9 Billion, Up 9% Year-Over-Year
According to the results of the latest Brick Meets Click/Mercatus Grocery Shopper Survey, July 2024’s eGrocery sales surged to almost $8 billion, reflecting a 9.2% increase over the previous year.
This growth is largely attributed to the ongoing promotional activities by key players like Walmart, Instacart, and—most recently—Amazon. Their deep discounts on delivery fees have not only significantly boosted Delivery sales since May, but are continuing to expand the receiving format’s user base.
The impact is evident when we look deeper into sales figures by receiving method:
- Delivery sales soared 22% year-over-year, driven by discounts and promotions on memberships, such as 50% off of Walmart+ and Instacart’s 80% discount on its annual plan.
- Ship-to-Home experienced a 6% increase in sales. Its slight dip in order frequency was offset by increasing monthly active users (MAU) and average order value.
- Pickup sales remained steady year-over-year. However, slight declines in order frequency, order volume and MAUs suggest that customers who previously used this service option are taking advantage of the delivery discounts mentioned above.
For a further breakdown of the numbers, including key takeaways and actionable advice, keep reading below.
July 2024 US Online Grocery Sales Analysis
Is Delivery’s Growth Sustainable?
As mentioned above, the surge in Delivery sales can be traced back to the promotional strategies employed by major retailers.
Walmart’s mid-July offer of a 50% discount on its Walmart+ membership, reducing the annual fee from $98 to $49, significantly boosted its Delivery MAU base. Similarly, Instacart’s 80% discount on annual memberships and Amazon’s extended 90-day free Prime trial, which included unlimited grocery delivery, have driven user engagement and order frequency.
Companies like DoorDash and Uber Eats are also luring customers with attractive delivery fees, but it’s unclear how this model will work once the promotional period ends. In fact, the sustainability of delivery’s gains as a whole remains a critical question.
Eventually, these promotional efforts will conclude and sales could face diminishing returns if the ongoing service is not aligned with customer expectations and quality of experience.
Impact on Regional Grocers
The outcome of delivery’s recent growth is certainly of interest to regional grocers faced with the challenge of deciding between short-term gains through third-party platforms or the long-term objective of building robust first-party services.
We’ll dive deeper into this topic in our strategic recommendations below, but suffice it to say regional grocers should be cautious about relying too heavily on third-party platforms for short-term sales boosts. It could undermine a retailer’s ability to build and operationalize effective long-term programs.
The Role of Customer Segmentation and Pricing
Analysis of July’s data reveals that households with annual incomes under $50K are increasingly pressured by rising costs, leading to declines in MAUs, order frequency, and AOV . This trend is particularly concerning as it contrasts with the broader growth seen in the eGrocery market and highlights the need for retailers to understand customer segments and their specific shopping behaviors.
This has proven crucial for Sprouts Farmers Market, which has recently found success by targeting specific customer segments despite being on the higher end of the pricing spectrum. This approach underlines the importance of using shopping data to understand customers. Then, using this understanding to deliver personalized marketing and targeted promotions that drive customer loyalty and repeat business.
Don’t Overlook Cross-shopping Trends
With the impressive growth in Delivery, it’s important not to overlook the cross-shopping data that has remained consistent throughout the year. The July 2024 numbers once again reflect that nearly one-in-three grocery shoppers also made a purchase from a mass retailer.
Walmart led the pack, with 22.5% of grocery customers ordering from them—up 430 basis points from last year and marking the highest level in 2024. Target also saw growth, with almost 15% of grocery shoppers making an online order from them, the highest in two years.
10 Key Takeaways from July 2024 eGrocery Sales:
- The U.S. eGrocery market reached $7.9 billion in July 2024, marking a 9.2% increase over the same month last year.
- Delivery sales grew by 22% year-over-year, driven by aggressive promotional efforts from major players like Walmart, Instacart, and Amazon.
- Ship-to-home sales rose by 6%, continuing its trend of positive growth.
- Pickup sales held steady compared to July 2023, although there was a slight contraction in order frequency and MAUs.
- Delivery’s MAU base expanded by more than 10% year-over-year, while Ship-to-home saw a nearly 4% increase. In contrast, pickup’s MAU base contracted by less than 2%.
- Overall eGrocery order volume increased by approximately 5% year-over-year, with delivery orders surging nearly 20% and pickup orders falling by 3%.
- Composite spending per order across all three receiving methods increased by almost 4% compared to July 2023.
- Ship-to-home’s AOV grew by 4%, while pickup and delivery saw smaller increases of 3% and 2%, respectively.
- Households with annual incomes under $50K reported declines in MAUs, order frequency, and AOV, indicating financial pressures affecting online grocery buying behaviors.
- Cross-shopping remained high, with 32.1% of grocery customers also buying from mass retailers. Walmart’s share increased to 22.5%, and Target’s to 14.9%, both reaching their highest levels in 2024.
Strategic Recommendations for Grocers
Manage Third-party Platform Reliance
While third-party fulfillment partnerships can provide immediate gains for grocers, they also come with significant risks—especially when promotions are driving the bulk of the growth.
In the latest episode of US eGrocery Sales Trends, David Bishop, Partner at Brick Meets Click, emphasizes the importance of not becoming overly reliant on these third-party platforms, as they can undermine a grocer’s long-term strategy of building a sustainable first-party business.
The temporary surge in sales driven by deep discounts and aggressive promotions could lead to a “short-term addiction” that detracts from a retailer’s ability to cultivate and operationalize their own customer relationships and services.
To mitigate this risk, regional grocers should focus on gradually shifting demand towards their own first-party platforms. By doing so, they can retain more control over the customer experience and ultimately build a more sustainable business model that isn’t overly dependent on external platforms. This strategy also allows grocers to invest in their own infrastructure, improving customer loyalty and reducing the long-term cost of customer acquisition.
Use Your Customer Data
Another key advantage of developing first-party services is the ability to collect and leverage customer data more effectively.
With a better understanding of customers based on their shopping data, grocers can segment customers more accurately and tailor marketing strategies accordingly—including personalized promotions, developing subscription models that cater to specific customer needs, and offering loyalty programs that enhance the shopping experience.
This strategy is ripped straight from the playbook of large retailers like Walmart and Amazon, which both do an excellent job of using customer data to power their subscription services and personalized marketing campaigns. Regional grocers can achieve a similar outcome at a fraction of the investment by utilizing contextualized commerce solutions like AisleOne from Mercatus.
Leverage Mobile Apps for Omnichannel Commerce
Another large retailer strategy that regional grocers can adopt and adapt is using their mobile app for more than online shopping. Retail giants like Walmart and Target have successfully unified their commerce platforms through mobile apps to increase sales online, yes, but also in-store.
For regional grocers, a well-designed mobile app enhances the customer experience by facilitating easy online ordering, in-store navigation, and personalized offers that are redeemable through any channel they choose.
By leveraging customer data, these apps can highlight past purchases, recommend products, and offer tailored discounts, which help to foster long-term customer relationships. A unified mobile app experience like this can also support loyalty programs and increase in-store traffic by offering features like real-time inventory checks and location-based promotions.
By combining traditional customer service strengths with modern technology, grocers can create a differentiated and engaging shopping experience that encourages repeat business both online and in-store.
Closing Thoughts
This month’s data—and the advice being offered based on that data—combines to emphasize the importance of customer retention. The numbers and the factors behind those figures suggest that while promotions can lead to short-term sales boosts, the key to long-term profitability lies in retaining customers long after the deep discount period has ended.
By leveraging customer data to personalize the shopping experience and implement truly effective loyalty programs, grocers can create stronger customer bonds, encourage repeat business, and increase customer lifetime value.
A focus on retention not only stabilizes revenue but also provides reliable, long-term profitability.
As always, thank you for reading.
For more information related to the Brick Meets Click/Mercatus July 2024 Grocery Shopping Survey, read the full press release.
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