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US customer shift to online grocery shopping likely permanent, analysts say

The COVID-19 pandemic has pushed a record number of U.S. consumers to shop online.

According to a new Brick Meets Click/Mercatus Grocery Survey, around 43 million customers shopped online for groceries in the United States in May, or 33 percent of U.S. households. That number is an all-time high, and represents an increase from the previous record of 31 percent set in April.

Online grocery sales grew at an even faster rate, spiking 24 percent over April to reach USD 6.6 billion (EUR 5.9 billion) in May, the survey found.

“COVID-19 has accelerated online grocery adoption at a rate the industry hadn’t expected to see for years,” Mercatus President and CEO Sylvain Perrier said in a statement accompanying the release of the report. “The online surge may level off slightly as various states strive to return to ‘normal.’ However, what has changed in shoppers’ eyes is the realization of the immediate benefits of online grocery shopping.”

As they grow more comfortable with ordering through e-commerce sites, consumers’ average online grocery order value climbed nearly 6 percent in May to USD 90.00 (EUR 80.00) in May, an increase of almost USD 5.00 (EUR 4.45) compared to April, the survey found.

“Higher consumer prices starting in April, improvements in product availability, and more customers becoming comfortable with online grocery shopping all contributed to this trend,” Mercatus said.

May’s increase in shopping activity is likely a result of retailers increasing capacity, the survey found. While online grocery sales surged 37 percent from March to April 2020, many retailers experienced bottlenecks in their supply chain and ability to deliver groceries to customers’ homes. Those problems have now largely been addressed, according to the survey.

“This gain further reflects increased capacity, making it easier for people to secure a time slot for pick up or delivery as they wrestle with concerns about the virus and shopping in-store,” Brick Meets Click/ Mercatus said.

The total number of online grocery orders increased 18 percent on a month-over-month basis from 62.5 million in April to 73.5 million in May, Brick Meets Click/ Mercatus found. The increase was driven by expanded capacity associated with retailers reopening after a period of closure, or expanding their services, and others who added more pick-up or delivery time slots to better meet the surge in demand, the research firms said.

Brick Meets Click/ Mercatus found that the economic impact of the COVID-19 crisis is affecting the type of products shoppers buy. The number of U.S. households reporting a dramatic drop in income of 25 percent or more (versus earlier in 2020) reached almost 50 million for May. Likely as a result, 14 percent of the U.S. households who purchase private label reported that they bought more private label during May compared to prior the COVID-19 crisis. Overall, however, sales of fresh, frozen, and shelf-stable seafood have all risen during the crisis.

Regardless of how long the coronavirus-related economic downturn lasts,

Brick Meets Click/Mercatus predicts more Americans will continue to shop for groceries online throughout this year and into the future. That prediction was echoed by Business Insider Intelligence, which estimated that 43 percent of U.S. consumers will have used online grocery by the end of June 2020.

“We believe the surge in online grocery usage indicated by our survey suggests that this will be a continuing trend,” the research firm said in a press release.

Some of the biggest winners as a result of this trend will be Walmart, Target, and other major retailers, who have all grown their grocery e-commerce sales in the U.S. significantly in recent years and months.

Target said e-commerce sales spiked more than 100 percent in the first quarter of 2020, Digital Marketing Industry News reported.

In April, Target’s online sales rose by 275 percent.

Target’s same-day curbside pickup and delivery have helped boost e-commerce sales, according to the retailer.

“After their first pickup, three-quarters of consumers use Target’s online ordering again within three months, and their spending increases by nearly 25 percent with online purchases, specifically, rising 50 percent,” Digital Marketing News said.

Walmart also had an astounding 74 percent increase in e-commerce sales in the first quarter of 2020, according to Progressive Grocer. Walmart attributed the rise to growth in food and consumables, such as toilet paper.

At the same time, Walmart’s U.S. same-store sales jumped 10 percent in the first quarter.

 

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