Online grocery sales rise 7% in August to $9.9 billion

U.S. consumers spent $9.9 billion online buying groceries and consumables in August, up 7% from a year ago, according to a Brick Meets Clicks/Mercatus Group survey completed Aug. 31.

The increased spending of $600 million was a combination of food inflation and more consumers choosing online grocery thanks to more promotional membership offers.

August marked the third consecutive month of high-single-digit sales gains for online grocery this year, primarily driven by strong promotional efforts for subscription and membership programs that started in May, the report noted. Beginning in May, Instacart offered 80% off its annual membership rate. Walmart followed with a 50% discount on its membership program, and Amazon, Walmart and others offered more promotional deals through August with back-to-school shopping.

Mercatus found the cumulative impact of promotional efforts is worth noting. Between June and August, total online grocery sales grew 7.9% from a year ago, well above the 1.4% growth in March and May. The difference in sales growth between the two periods equates to a 6.5% gain, but the incremental impact is likely closer to 2.2% after accounting for seasonality.

Delivery sales grew by 16.1% between June and August 2024, which also was well above the 0.6% between March and May 2024. Mercatus said the number of monthly users jumped 13.9% during the June-to-August period compared to a year ago. This compares to a monthly user growth of 4.6% during the preceding three-month period. Order frequency jumped 14.9% in the June-to-August period, versus a decline of 2.2% in the prior three-month period.

“Achieving growth will only get more challenging for grocers that don’t have a competitive offering or ways to offset the discounts,” said David Bishop, partner at Brick Meets Click. “Converting a customer into a member/subscriber motivates them to buy more frequently, especially given that most firms are promoting ‘free’ delivery. Even though there’s a cost to join, explicit fees are an ongoing source of friction that many shoppers want to avoid.”

Walmart Chief Financial Officer John David Rainey said recently that Walmart+ members and omnichannel customers spend two-thirds more than customers who only shop in stores or online. Mercatus said for Walmart, the positive impact of the promotions likely extends beyond online sales. The share of U.S. households that primarily shop for groceries at Walmart, either in-store or online, increased to approximately 30% in June-to-August 2024, up by 1.3% versus March-to-May 2024.

“Households that chose Walmart as their primary grocery retailer were already more likely to buy groceries online, and now the difference between Walmart and Supermarkets has widened even further on that metric. And, when households buy groceries online, Walmart’s primary customers are increasingly likely to do so from Walmart as well,” said Mark Fairhurst, Mercatus chief growth officer.

Mercatus said the promotional membership play by Walmart drew more consumers to online grocery. Walmart’s monthly average user base grew by 9% year over year, thanks to its promotional memberships.

All three of the online grocery segments grew sales in August compared to a year ago. Consumers who opted for ship-to-home accounted for 20% of the sales gains, up 8.9% to $1.8 billion. Pickup orders finished the month up 3.5% to $4.3 billion with a slight pullback in order frequency with average order value up 3.5% compared to last year. Delivery contributed more than half the overall sales gains for the month, up 10.2% versus a year ago to $3.9 billion.