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US eGrocery Sales Trends with Brick Meets Click – November 2022 Insights

Overview

In November, US online grocery sales totaled $7.7 billion, a 10% drop from the previous year, despite only seeing a decrease of 2% compared to the two previous months and up from $7.1 billion in May of 2022.

The November YoY decline was attributed to several factors including fewer households participating in online grocery shopping, lower spending per order and fewer monthly active users (MAUs). Despite this downturn, Delivery sales managed to stay consistent YoY. This sales shift was experienced more drastically in Grocery formats than it was in Mass channels.

The survey reported a 7% drop among customers in the 60-and-older age group, combined with a substantial decrease amongst 30–44 year old shoppers, the core customer segment for US eGrocery services. The Grocery MAU base was down 5%, while the Mass base rose 6%. Rising costs are becoming an increasingly important factor to customers when it comes to US eGrocery shopping; those seeking to avoid unnecessary expenditure were less likely to order groceries online in November.

Interestingly, survey participants cited cost as the top factor in their choice of where to shop online by 42% of Delivery and/or Pickup MAUs. This is an increase from 37% in August 2020 when this question was initially asked. In addition, the share of Mass MAUs who cited cost as the most important selection criteria has remained largely unchanged at 45%, while the share of Grocery customers who cited it as their top reason significantly increased from 25% in August 2020 to 38% in November 2022.

The November sales numbers emphasize how inflation may be affecting the online grocery market, and how budget-conscious US consumers are when it comes to their grocery shopping. The data shows that they are seeking savings through increased cross shopping between Mass merchants.

In this competitive market, 30% of US online grocery shoppers reported using both Mass and Grocery retailers, reflecting a 6 percentage point growth since the same time last year. It’s evident that US grocery shoppers are more discerning than ever, finding the most cost-effective ways to shop while still having access to a wide variety of products.

While Ship-to-Home reported lackluster demand, more US households opted for Pickup and Delivery formats, with the latter growing in the low single digits. Further analysis shows Grocery MAUs falling 11% in November compared to last year, while Mass MAUs experienced a notable 8% increase.

Overall spending per order across Delivery, Pickup, and Ship-to-Home remained steady. While delivery purchases saw a 4% growth in average order value (AOV), Pickup and Ship-to-Home both registered a 5% decrease compared to a year prior.

The Composite Repeat Intent metric, which measures the likelihood that customers will use the same service again within the next month, increased 4 percentage points to 62%. Mass is outperforming Grocery when it comes to this key metric, with 65% for Mass compared to 59% for Grocery. The challenge here lies in providing customers with the great experiences they expect from online grocery shopping – something which can be difficult amid increasing costs and declining AOVs.

The total grocery spend declined 5% YoY, with online spending dropping 2x that rate. Further, online’s share of total grocery sales contracted over three points to finish at 10.1% in November. Excluding the Ship-to-Home segment (since it is not offered by most conventional supermarkets), Pickup and Delivery’s combined contribution was 8.5% for the month.

Total grocery spending softened, declining 5% versus last year. Since online sales decreased at twice that rate, online’s share of total grocery sales contracted over three points to finish at 10.1% in November. Excluding the Ship-to-Home segment (since it is not offered by most conventional supermarkets), Pickup and Delivery’s combined contribution was 8.5% for the month.

All-in-all, regional grocers are facing headwinds with inflation and rising costs of grocery products. Mark Fairhurst has suggested that the impact appears to be a 8-10% increase in prices. Therefore, they may want to meet this changing consumer trend and offer tiered fee structures based on when customers want to receive their orders. Shoppers should have the opportunity to choose shorter cycle times or lower fees in order to save money. By selecting a longer delivery window, customers can save a couple of dollars while still having their groceries delivered right to their doorstep. It’s clear that tiered fee structures represent an effective way for grocers to remain responsive to customer needs while still keeping costs low.

Thank you for reading this month’s eGrocery Sales Insights with Brick Meets Click.

If you haven’t yet, make sure you check out the full press release here.

Speakers

David Bishop

David Bishop

Partner, Brick Meets Click