BARRINGTON, ILL.  — Online grocery sales for pickup and delivery remained steady, while ship-to-home sales declined in July, according to the Brick Meets Click/Mercatus Grocery Shopping Survey for July 29-30. 

The US online grocery market generated $6.7 billion in sales, and an overall sales decline of 2% driven largely by an 8% drop in ship-to-home sales versus June. Sales levels for pickup/delivery and ship-to-home are respectively 4.5 and 1.8 times greater than pre-COVID sales in August 2019. 

“The July results clearly reinforce that online shopping has maintained a significant portion of last year’s gains, especially for pickup and delivery, but the surge in new COVID-19 cases during July appears to have impacted shoppers’ buying behaviors differently than at the onset of this crisis in 2020,” said David Bishop, partner with Brick Meets Click. 

July’s overall sales decline was caused by a decrease in spending per order and a slight drop in monthly order frequency, which were partially offset by an increase in the number of monthly active users (MAU). 

Due to two factors, the weighted average spending per order across all three receiving methods shrank more than 5% in July 2021 versus a month ago. First, the ship-to-home average order value (AOV) was nearly 19% lower versus June 2021, while the pickup/delivery AOV essentially held steady. Second, ship-to-home captured a larger share of orders on a month-over-month basis, which contributed further downward pressure on the top-line AOV because ship-to-home’s spending per order is typically about half that of pickup and delivery orders. 

The number of US households that bought groceries online in July, using any of the three receiving methods, jumped nearly 5% to 66.5 million households compared to June 2021. This gain reflects increases across all age groups with the youngest (18-29 years old) climbing the fastest by more than 7%. 

“Although pickup continued to have the largest MAU base, share of orders, and sales during July 2021, concerns about the Delta variant’s transmissibility may be motivating customers to temporarily shift away from pickup as a means of social distancing,” Bishop said. “Even though many retailers have implemented ‘contactless’ tactics since last year, pickup in the US still often involves some degree of human contact, such as when an employee puts the order in the customer’s vehicle. So for some, choosing delivery feels like a better, safer option as we navigate this next wave of COVID.” 

The share of online customers who used both a grocery service and a mass/discount service to buy groceries during July 2021 contracted to 25%, down about three points versus the prior month. This downtick was attributed to fewer grocery customers shopping with mass/discount retailers other than Target or Walmart, as cross-shopping with both these two retailers increased between the June and July months. 

“Grocers should be thinking about near-term improvements that will set them up for ongoing success as the monthly results reinforce that the online customer wants flexibility and convenience,” said Sylvain Perrier, president and chief executive officer, Mercatus. “Progressive retailers are reducing operational sources of friction, like the frustration and uncertainty associated with wait times. At the same time, grocers need to better understand their core customer so they can build more meaningful engagement that leads to increased share of wallet.”