Pickup continues to make gains in grocery e-commerce

Online Grocery Sales Experience Erosion as Shoppers Seek Brick-and-Mortar Stores

The dynamics of online grocery sales have taken a surprising turn in 2023, as the COVID-19 pandemic-driven surge in digital sales has waned, revealing a preference among consumers for shopping in physical stores. Data from Brick Meets Click and Mercatus highlights this shift in shopping behavior.

During the first six months of 2023, overall digital grocery sales decreased by 1.8% compared to the same period last year. The decline was more pronounced in delivery sales, which fell by 2%, and ship-to-home sales, involving orders sent via carriers like FedEx and UPS, which saw a significant 9% decrease. In contrast, pickup sales experienced a rise of 1.3%, indicating that consumers are drawn to the convenience and cost-effectiveness of this fulfillment method.

David Bishop, a partner at Brick Meets Click, emphasized the appeal of pickup options, stating, “Pickup’s stronger performance isn’t surprising as it is becoming more widely available and helps customers who want to shop online save money, which is certainly helpful in the current market.”

The latest data from June shows that pickup sales continued to grow, experiencing a year-over-year increase of 3.2%. The rise can be attributed to a growing number of monthly active users for the channel, with some grocers opting to offer it to shoppers without a fee. However, the average value of pickup orders did show a slight decline during the month.

Comparatively, the average order value for delivery orders increased by 7% in June, while the ship-to-home segment saw a 1% decline.

The positive momentum for pickup builds on its significant growth in May, when it accounted for over half of all grocery e-commerce sales, experiencing a notable 9.1% increase.

In addition to the changes in sales patterns, Brick Meets Click and Mercatus observed that online customer engagement stabilized in June, after a three-month decline. The overall repeat intent rate held steady at 63%, the same level as in June 2022. However, it remains more than 10 percentage points lower than the pre-pandemic figures.

Notably, shoppers who consistently return to the same retailer for digital grocery services tend to spend considerably more than first-time users. Those who used an online grocery service from a grocer or mass merchant at least four times in the previous three months had an average order value 57% higher than first-time users.

Sylvain Perrier, president and CEO of Mercatus, emphasized that to enhance customer engagement, regional grocers must focus on improving the perceived value of the online shopping experience. He suggested leveraging personalized recommendation algorithms to offer relevant product suggestions based on individual preferences and past purchases, optimizing platform usability to reduce friction, and providing personalized discounts, digital coupons, and loyalty rewards. These strategies can help grocers enhance the overall online shopping experience and retain customers in an increasingly competitive market.

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