U.S. Online Grocery Sales Weakened in May

The U.S. online grocery sales totaled $6.8 billion for May 2024, a 0.4% dip versus last year. Despite a year-over-year gain in overall monthly active users (MAU), sales growth was restrained by a pullback in order frequency across all receiving methods versus last year, according to the Brick Meets Click/Mercatus Grocery Shopper Survey fielded May 30-31, 2024.

Pickup sales dropped 3.9% in May ’24 versus ’23, despite an MAU base that grew by nearly 3%. What pulled down monthly sales results was a 6% decline in order frequency and a slight decline in average order value (AOV).

While Pickup ceded 178 basis points (bps) of online grocery sales share versus last year, it continued to wrestle order share away from Delivery in Large Metro markets where nearly 60% of U.S. households reside for the second year.

Delivery finished the month essentially flat as sales were up just 0.2% compared to a year ago; however, countering the lower order frequency rates, the segment experienced very strong growth in its MAU base, which expanded in the low teens, and its AOV rose approximately 2% versus May 2023.

Delivery grew its share of total online grocery sales by 19 bps versus last year to the end of May with 32.7%.

May 2024 online grocery sales

“During May, Delivery benefited from deep discounts related to annual memberships offered first by Instacart (80% off) and later in the month by Walmart (50% off),” said David Bishop, partner at Brick Meets Click. “These promotions likely drove Delivery’s strong jump in MAUs and show how players like Instacart and Walmart are attempting to keep active customers engaged by getting them to commit to 12 months instead of just one.”

For May 2024, cross-shopping remained elevated as 3 in 10 customers bought online from both Grocery and Mass during the past month. The share of Grocery customers (which includes both Supermarkets and Hard Discounters) that also received an online grocery order from a Mass retailer in May 2024 increased by 510 bps to 31.5% this year. Also, the cross-shop rate between Grocery and Walmart climbed compared to last year, reaching nearly 20% by May 2024.

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May’s repeat intent rates were down as the likelihood that a customer will complete another online order next month with the same online grocery service used most recently fell over two percentage points to 57.8%, driven by a drop in repeat intent rates for the 30 – 44 age group, the heaviest users of these services.

The Grocery format fueled the decline of online grocery sales as it dropped five percentage points, while the Mass format repeat intent rate remained unchanged between May 2023 and 2024.

In terms of where households buy most of their groceries, whether in-store or online, Mass retailers increased penetration year-over-year, growing 110 bps to finish the month at 39.7%.  Meanwhile, Supermarkets continued to hold the top spot with 41.1% despite losing 90 bps points since May last year. 

“Customers appreciate the convenience of online grocery shopping but are increasingly looking for ways to save money as inflation has taken a toll on the household wallet,” said Mark Fairhurst, Chief Growth Officer at Mercatus. “While digital deals are a good start, it’s crucial to focus on more targeted, personalized, contextual offers based on past purchases, shopper profiles, preferences, or search behavior to engage better and retain customers.”