Dive Brief:
- Online grocery sales in May increased 1.7% compared to the same month last year, to $7.1 billion, according to the latest monthly report from Brick Meets Click and Mercatus. Pickup saw sales increase 9% year-over-year, while delivery bumped up 5%.
- Across the grocery and mass retail channels, the percentage of shoppers who pointed to costs as their top selection criteria rose to 43% in May from 37% in August 2020. But while the share of grocery shoppers citing cost as their main consideration rose during the period, the figure remained relatively unchanged among customers of mass retailers.
- The increased focus among shoppers on costs could drive demand toward pickup, which often carries lower e-commerce fees than delivery, David Bishop, partner at Brick Meets Click, said in the announcement.
Dive Insight:
As high inflation continues to squeeze shoppers’ wallets, the costs associated with grocery e-commerce have become top of mind for consumers as steep food prices impact their shopping behavior, according to Brick Meets Click’s survey data.
“[T]he importance of ‘getting the products you want’ has dropped from the top consideration to the bottom when ranked against the elements of cost and convenience, and this holds true for both Pickup and Delivery services” for grocery shoppers, Bishop said in the report.
Rising prices appear to be pushing online grocery shoppers to mass retailers. In May, the mass retailer channel saw a 20% year-over-year surge in its monthly active user base and a 2% uptick in online order frequency. Meanwhile, the grocery channel’s active user base contracted by 10%, while order frequency dropped by 5%.
The average order values recorded for both channels grew in May compared to the same time last year but didn’t match the rate of grocery inflation, which the report said suggests shoppers are buying fewer items.
Cross-shopping between the channels set a new record with 33% of grocery’s active monthly user base also shopping online at mass retailers for groceries — almost 4 percentage points higher than the previous record set in December 2021.
The uptick in pickup sales for the month was largely driven by its more than 10% growth in users. Delivery saw “modest gains” among active users and average order value compared to pickup. Ship-to-home sales, meanwhile, dipped 16% year-over-year, with a more than 10% drop in average order value and a “similar rate of decline” in order frequency.
As they confront the threats posed by mass merchants and high inflation, grocers can lean into pickup to help recapture online shoppers, Sylvain Perrier, president and CEO of Mercatus, said in the report.
“Assuming the pickup experience aligns with customer expectations, showcasing the savings associated with pickup’s lower fees, no fuel surcharges, or zero tips can better protect your online customers and sales by highlighting a more affordable alternative to home delivery,” Perrier said.
