In March, online grocery sales hit an all-time high. And then in April, online grocery retailers topped that record by about 37%, according to survey data from grocery consultant Brick Meets Click (BMC) and research firm Symphony RetailAI.
Online grocery sales reaches $5.30 billion in April
In the preceding 30 days, the survey shows online grocery sales reached a new record of $5.30 billion, up from $4.00 billion a month earlier. Driving the sales growth was a 33.3% increase in the total number of orders—62.5 million in April vs. 46.9 million in March. Spending per order grew more modestly, as did the number of online grocery shoppers.
The average order size reached $85 in April, up from $82 in March, BMC and Symphony RetailAI survey found. The number of shoppers who ordered groceries online for home delivery or store pickup order grew slightly more than 1%, reaching 40 million, compared with 39.5 million in March, the research finds. Those online shoppers placed an average of 1.6 online orders for delivery or pickup during the past 30 days compared with 1.2 orders during March, according to the survey.
“In light of the continuing crisis facing households, April’s gains reflect two key realities,” Bishop says. “First, the strong, month-over-month growth, which comes on top of March’s sudden surge, is a testament to the rapid response of retailers increasing their capacity to fulfill even more online orders. Secondly, households are increasingly forming new shopping routines, as evidenced by the growth of past-30-day order frequency.”
Shoppers more comfortable ordering groceries online
BMC conducted the survey—which asked consumers about their online grocery purchases over the preceding 30 days—April 22-April 25 among 1,651 adults, 18 years and older, who participated in the household’s grocery shopping. The firm compared the results to a similar survey of 1,601 adults conducted March 23-March 25.
Shopper satisfaction improved only slightly during the month based on the likelihood to shop the same service provider again. In April, 50% of households said they were likely to buy from the same provider again, compared with 47% in March. BMC says the satisfaction rates “reflect the reality that out-of-stocks and limited availability still challenge current shopping experiences for pickup and delivery time slots as demand continues to outpace capacity.”
What is affecting online grocery shopping behavior?
BMC and Symphony RetailAI found two factors affecting online grocery shopping behavior:
- Fear of contracting the coronavirus: 47% of households surveyed reported a high level of concern about becoming infected with the coronavirus, which causes COVID-19.
- A recent loss of income: 39% of respondents reported a 25% or higher drop in their monthly income compared with the January/February 2020 period. This represents an estimated 49 million households, a number that goes well beyond unemployment figures because many of these people still have work, but they are earning less.
“These two factors are particularly important for retailers to understand,” Bishop says. “The level of concern that customers have about health affects how they choose to shop—online or in-store—and the loss of income impacts where consumers shop and what they buy.”
How many shoppers stick with online grocery shopping—and whether retailers can make money offering it—is unclear, says Sucharita Kodali, vice president and principal analyst at Forrester Research. After the COVID-19 pandemic passes, she says, the adoption of online grocery might remain somewhat higher than it was before the pandemic, she says. But adoption will not stay at current levels, she says.
Downsides for the grocery business
Recent survey data from consumer packaged goods sales and marketing agency Acosta Insights found 51% of all U.S. households placed an online grocery order in the past four weeks ending April 7.
Other pitfalls for online grocery sales are the low profit margins in the grocery business and the cost-sensitivity of grocery consumers.
In a report released in April, Kodali cites a 2019 Forrester survey. Of the 4,206 U.S. adults who had not shopped for groceries online, 51% would do so if they could avoid delivery fees and 50% said they would do so if they could get better prices online than in stores. Among the 344 survey participants who had shopped for groceries online, the most-cited reasons were convenience (cited by 51%), followed by “I like the experience of shopping online” (34%).
If consumers want lower prices online, free delivery, or both, delivering those things could be difficult for retailers the notoriously low-margin grocery business.
“It will be a long time before online grocery is profitable,” Kodali says. “Some type of mass automation will be needed to get there.”