Grocery Sales Slow, But E-Commerce Thrives

Recent data from the U.S. Census Bureau and Brick Meets Click/Mercatus highlights a mixed picture for the grocery sector, with overall grocery sales showing slight declines while e-commerce continues to grow significantly.

Key Insights from U.S. Census Bureau Data

1. November Grocery Sales
   • U.S. grocery sales in November 2024 reached $74.92 billion, a 0.2% drop from October 2024’s $75.06 billion.
   • However, November 2024 sales are up from November 2023, when the total was $73.65 billion.
   • This drop in grocery sales reflects ongoing challenges in the sector, including elevated prices as inflation persists. The consumer price index for food at home rose 0.5% in November.
2. Overall Retail Sales
   • Despite the slight grocery decline, overall retail sales increased by 0.7% in November, continuing the momentum from October’s 0.5% growth.
   • Strong consumer spending is bolstered by job and wage gains, modest inflation, and a healthy consumer balance sheet, according to Jack Kleinhenz, chief economist at the National Retail Federation.

Grocery E-Commerce Growth

1. Significant Growth in E-Grocery
   • E-grocery sales in November 2024 hit a record-breaking $9.6 billion, reflecting a 17.8% YoY increase.
   • A record 77.8 million households made online grocery purchases, surpassing the previous high set in April 2020 (during the pandemic’s first full month).
2. Increased Engagement
   • The growth was driven by a broader monthly active user base and higher order frequency, though overall spending per order remained steady compared to 2023.

E-Grocery Fulfillment Channels

1. Delivery Sales
   • Delivery sales saw a 22% YoY increase, accounting for 40.6% of all e-grocery sales.
2. Pickup Sales
   • Pickup fulfillment grew by 8% YoY, now comprising 41.3% of total e-grocery sales.
3. Ship-to-Home
   • Ship-to-home orders accounted for 18.1% of e-grocery sales.

Analysis and Implications for the Grocery Industry

1. Increased Competition in E-Grocery
   • Supermarkets experienced a surge in monthly active users, helped by deep discounts on membership and subscription programs.
   • However, competition to retain customers and capture more of their share-of-wallet is intensifying as more grocers push for growth in e-commerce.
2. Focus on Personalization and Seamless Experience
   • To foster repeat purchases and drive larger orders, grocery retailers need to personalize the shopping experience.
   • Offering tailored product recommendations, intuitive navigation, and reward programs will be key to building customer loyalty and sustaining long-term growth in the online grocery space.

Conclusion

While traditional grocery sales have slowed down slightly, e-commerce continues to thrive, with e-grocery sales experiencing significant growth. Grocers are increasingly focusing on personalized online shopping experiences and leveraging discounts and subscriptions to attract and retain customers. The shift towards online grocery shopping is becoming an essential area for growth, with delivery and pickup options leading the way.

For more insights and updates, explore more news on this website.