Online Competition for Supermarkets Gets More Intense
Brick Meets Click/Mercatus has released its most recent Grocery Shopper Survey, which demonstrates changing e-grocery market dynamics since the onset of the pandemic four years ago.
The survey, fielded March 29-30, found that competition online for the active customer has gotten more intense for supermarkets – especially from Walmart. Before COVID, only 15% of the customers who bought online from grocery (which includes supermarket and hard discount) also completed an online grocery order from a mass retailer during the same month. For March 2024, that cross-shopping rate stands at nearly 27% as reduced purchasing power continues to motivate some households to change where they buy groceries.
[RELATED: Inside Walmart’s ‘Adaptive Retail’ Era]
This elevated rate of cross-shopping potentially affects customer expectations based on experiences elsewhere, like with mass retail. This may explain why the likelihood of using the same grocery or mass service again within the next month in March 2024 was 18% below pre-COVID intent rates, and why the gap between grocery and mass has widened.
"Helping customers build their basket of goods by using tactics like personalized offers or targeted deals is not just key to growing sales, but also to improving the chances that they’ll come back again,” said Mark Fairhurst, global chief growth officer at Toronto-based Mercatus. “For today’s grocers, keeping your online customers engaged is more important than ever, as growth is now more likely derived from increased order frequency and/or spend per order.”
Building a mobile app that assists customers as they shop, whether that’s online or in-store, can help. Mass retailers like Walmart and Target have already invested heavily in enhancing the perceived value from using their mobile apps.
[RELATED: Walmart Revamps Its Digital Storefront]
Meanwhile, the overall U.S. online grocery market ended March with total monthly sales of $8.0 billion, holding steady compared with a year ago. These monthly results are an improvement over March 2023, when total monthly e-grocery sales had fallen 8% on a year-over-year basis. Current sales are 23% above the levels posted in March 2020, the initial month of the pandemic in the United States.
“While most people recognized that the pandemic was a catalyst for buying groceries online, few could fully anticipate the implications of that surge,” said David Bishop, partner at Barrington, Ill.-based Brick Meets Click. “Now, four years after COVID-19 first impacted our everyday lives, e-grocery in the U.S. looks very different from both a contribution and growth perspective, and this will impact how grocers and others expand and drive profitability in their respective businesses moving forward.”
[RELATED: FTC Says Large Grocers Exploited Their Power During Pandemic]
From a contribution perspective, pickup and delivery share has grown at the expense of ship-to-home. Pickup, which accounted for less than one-third of e-grocery sales in 2019, quickly moved to the top spot when the pandemic started, and it has stayed there ever since, expanding 586 basis points (bps) from March 2020 to 43.2% this year. Delivery, which represented one-quarter of all online sales in 2019, experienced an even larger jump in market share, expanding by 1,488 bps during the same period, to end March 2024 with 39.1%.
For more information about the March 2024 survey results, check out the Brick Meets Click eGrocery Dashboard.
The Brick Meets Click/Mercatus Grocery Shopping Survey is an ongoing independent research initiative created and conducted by the team at Brick Meets Click and sponsored by Mercatus. Brick Meets Click conducted the most recent survey on March 29-30, 2024, with 1,810 adults, 18 years and older, who participated in the household’s grocery shopping, and similar surveys in March 2023 (n=1,742), March 2022 (n=1,681), March 2021 (n=1,811) and March 2020 (n=1,601).
