The online grocery sector is moderating as consumers seek value across channels.
It may have been the first month of a new year, but the January e-commerce market indicated a continued consumer focus on value. The latest Brick Meets Click/Mercatus Grocery Shopping Survey showed another decline in order frequency, plus a still-flat average order value.
According to the survey, the online grocery market reached $8.5 billion last month, as digital sales across all formats accounted for 13.4% of total weekly grocery spending at that point in time. In a bit of welcome news, the market in January was up 1.8% from the previous year.
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Still, some of the growth comes at the expense of traditional grocers. The Brick Meets Click/Mercatus survey revealed that e-comm sales in the mass channel continued to grow while supermarkets contracted.
There was some other wobbliness within the digital space, too. Ship-to-home sales grew 7.8% compared to January 2023, as delivery sales edged down 0.5%. Pickup – a model that has been a rather consistent bright spot in e-comm – declined, as sales were off 1.9% last month due to lower order frequency and reduced average order values.
The researchers said that the uneven results for the opening month of 2024 show that competition remains strong in the online channel and that consumers are still making choices based on their budgets. “When more than 10% of U.S. households have less money to spend on groceries this year than they did last year, changes in buying behavior are certainly expected,” said David Bishop, partner at Brick Meets Click “The reduction in SNAP payments that took effect at the end of February 2023 is one of the factors driving the flight-to-value trend which we’ve observed and tracked since mid-2023.”
Added Mark Fairhurst, global chief growth officer at Mercatus: "Competing online is only getting more challenging for regional grocers as customer expectations continue to increase. So, beyond improving key elements of the experience, like fill rates, wait times, and product quality, regional grocers also need to work even harder to identify additional ways to help their customers save money."
Brick Meets Click and Mercatus plan to release a five-year eGrocery Market Forecast later this month.
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