Inflation, New COVID-19 Cases Catalysts for Jump in E-Grocery Sales

The twin drumbeats of inflation and COVID-19 continued to resonate through the online marketplace this summer, according to the latest Brick Meets Click/Mercatus Grocery Shopping Survey.

The survey found that high prices helped propel a 17% increase in e-commerce grocery sales in July. Total online grocery sales for that month rose to $7.8 billion, and the average order value was up 11% compared to July 2021.

In addition to inflation, the rise in sales was attributed to another surge in COVID-19 cases, this time due to the more contagious and dominant BA.5 variant. Pickup and delivery segments edged higher in July, with a 5% increase in the monthly average user (MAU) base for pickup and a 4% increase in delivery. Last month, 41% of all households in this country used a grocery pickup and/or delivery service. At the same time, only one-fifth of households reported that they were “not at all concerned” about COVID-19.

“COVID-19 concerns coupled with inflation have forced a trade-off between two fundamental desires for shoppers – not getting infected and not paying more than necessary,” observed David Bishop, partner at Brick Meets Click. “While online shopping – especially delivery – costs more than in-store shopping, using an online service may help prevent illness which could cost more in the long term due to lost wages and other life complications.”

The fallout from ongoing inflation is impacting the omnichannel marketplace in other ways, the new survey showed. The mass channel, for example, saw a 1% lift in the number of MAUs compared to a year ago while the MAU base for grocery dipped by 10%. Mass customers also boosted their monthly orders by 5% as grocery customers decreased their order frequency by 2%. And three in 10 customers who placed at least one online order with grocery during the past 30 days also placed an order with a mass retailer.

According to the survey researchers, those findings should spur grocers to assess their value proposition and strategies for the best results across in-store and online channels and various buying models. “Online customers are highly motivated by convenience, and pickup offers customers a higher degree of convenience and control at a lower cost than delivery,” pointed out Sylvain Perrier, president and CEO at Mercatus. “My advice to regional grocers is to use your store locations to your competitive advantage and promote pickup services to your delivery customers.”