Online grocery sales in January decreased 1.2% compared to the same month in 2022, according to the latest monthly Brick MeetsClick/Mercatus Grocery Shopping Survey, fielded Jan. 30 - 31, 2023.
The U.S. online grocery market reached $8.4 billion in total sales in January, driven by a decrease in ship-to-home sales, which declined 15% to $1.3 billion. Pickup posted the strongest gains, increasing almost 3% on a year-over-year basis to 4.1 billion, while delivery grew less than 1%, holding steady around $3.0 billion. The three segments made up 12% of total grocery spending in January.
Following the holidays, which saw an increased interest in private label groceries, monthly annual users (MAUs) placed fewer online orders for groceries during the month, continuing a longer-term, downward trend since May of 2020. The decline in ordering frequency was driven by a combination of fewer MAUs making at least three orders during the month, and an increase in the number of households completing only one order.
“This large gap in repeat intent is concerning and should raise a red flag for conventional grocers,” said David Bishop, partner at Brick Meets Click. “While our monthly research didn’t examine the causes for the variations between grocery and mass, it could be associated with a number of variables, including product pricing, service-related costs, or differences in customer experience, so grocers may want to analyze what are the main culprits driving their respective rates lower.”
The average order value (AOV), which excludes the costs of using the service (charges, fees, tips), were mixed across the three receiving methods. Ship-to-home experienced a drop in AOV of over 5% versus January of 2022. Delivery and pickup reported gains of 6% and 8% respectively over the same period.
“Grocers would benefit from focusing on initiatives aimed at driving repeat engagement and loyalty to grow share of wallet with existing customers,” said Sylvain Perrier, president and CEO of Mercatus. “Customers now expect retailers to engage them based on their individual preferences and purchase patterns. A retailer’s first-party data is a great starting point to segment customers and develop a more personalized experience."