Drop in Online Grocery Sales Expected, According to Brick Meets Click
U.S. online grocery sales plummeted 14% to $8.0 billion in February from $9.3 billion in January, according to the latest Brick Meets Click/Mercatus Grocery Shopping Survey of 1,812 shoppers. But the drop shouldn’t be surprising.
“February’s overall sales contraction was expected,” said David Bishop, a partner with Barrington, Ill.-based Brick Meets Click, an analytics and strategic insight firm. “While January’s sales performance set a record high for online grocery sales, we also saw January’s shopper sentiment related to completing a grocery delivery or pickup order within the next month drop by approximately 10%, and that is what happened, albeit at a slightly higher rate, in February.”
The predominant driver of the February decline in sales was the smaller base of households buying groceries online — monthly active users dropped 12% from 69.7 million in January to 60.1 million in February. Much of the reduction (over 40%) came from the over 60 age group and may reflect growing confidence and/or personal preferences for in-store shopping as COVID-19 vaccinations rollout across the U.S.
Lower order frequency was also a factor in the sales decline with online grocery shoppers placing 6% fewer orders, averaging 2.7 orders during February compared to 2.8 during January. Most of the drop is attributable to the ship-to-home segment, which had a 12% decrease in order frequency, according to the survey. The combined delivery/pickup segment, however, was only down 4% on a month-over-month basis.
As households become more familiar with the range of online grocery shopping options, their experiences are altering their expectations and perceptions about the value of shopping this way, the report found. A 4% increase in average order value (AOV) on a month-over-month basis helped to offset the February declines in shopper base and order frequency.
The leading indicator, “likelihood to use a specific service again,” stabilized in February as 58% of households reported being extremely/very likely to place another order with the same delivery or pickup service within the next 30 days, according to the survey. While the overall satisfaction metric scores were essentially equal for both the pickup and delivery segments, the first-time user scores for each segment differed significantly. More than 40% of first-time delivery service users reported that they were extremely/very likely to use the same service again; in contrast, repeat intent scores for first-time pickup service users were more than 10 percentage points lower, landing below 30%.
“These scores are concerning as pickup is only becoming more vital to brick-and-mortar retailers for both strategic and economic reasons,” said Bishop.
Mercatus, which sponsors the monthly study, is an e-commerce grocery platform based in Charlotte, N.C.