US Online Grocery Market Rebalancing After COVID-19 Spike

U.S. online grocery delivery and pickup sales for August 2020 totaled $5.7 billion, down from June’s peak, but other key performance indicators showed strength. In particular, average order value increased to a record high of$95, and intent to make a repeat purchase in the next month reached 75% in a market that is nearly five times larger than it was just one year ago, according to the Brick Meets Click/Mercatus Grocery Shopping Survey fielded August 24-26, 2020.

August sales levels represent about a 20% drop compared to June, and changing shopper attitudes toward COVID-19 is likely one of the contributing factors.

According to Brick Meets Click, the ongoing research has documented a steady decline in the percentage of households that express a high level of concern about contracting the virus, dropping from a high of 47%in April to 38% in August.

“There is a common belief that the rapid and dramatic surge in sales caused by COVID-19, starting in mid-March, would recede at some point as stay-at-home orders and in-store shopping restrictions like occupancy limits, shortened hours and one-way aisles were relaxed,” said David Bishop, partner, Brick Meets Click. “While the August results reflect a retrenchment of sorts, the market appears positioned to begin a new growth cycle with a large base of committed shoppers.”

According to the survey results, approximately 37.5 million, or 29% of all U.S. households, are considered monthly active users of these online grocery services in August 2020 compared to 16.1 million one year ago. This gain of around 21.4 million represents a 133% increase in the number of active households placing at least one delivery or pickup order during the past month. 

“The rise in repeat purchases and spending means grocers are successfully acquiring new online shoppers, and equally as important, converting existing digitally engaged customers,” said Sylvain Perrier, president and CEO, Mercatus. “Even with diminished concern about COVID-19, grocery shoppers are realizing the benefits of a streamlined and frictionless online shopping experience. Going forward, it’s critical that grocery executives focus their teams on rewarding online shoppers by delivering a differentiated eCommerce experience that caters to consumers’ high expectations.”

On a year-over-year basis, monthly active online grocery shoppers are spending more per order and placing more orders per month according to the research. Spending per order rose to a record $95 in August 2020 –32% higher than a year ago –and active shoppers placed 1.6 orders per month compared to 1.0ordersin August 2019.

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Also, during August, 75%of customers indicated that they are extremely or very likely to use their most recent online grocery service provider again within the next 30 days. This level of repeat intent is a significant improvement from June and slightly surpasses the rate reported during August 2019, which highlights how improved retail conditions are leading to stronger shopping experiences.

“These results reinforce that grocery delivery and pickup services will continue to play an important role for both shoppers and retailers going forward. What’s also evident is that customers’ expectations will grow even higher, making it critical for retailers to continue improving the entire shopping experience,” concluded Bishop.