Target: Walmart customers are looking for household supplies and grocery delivery online

NEW YORK (Reuters) – U.S. online shopping spending is rebounding, helped by high fuel prices, convenient delivery options and a surge in transactions after a brief post-pandemic decline, U.S. retailers said.

Americans who started shopping online when many stores were closed or traffic was limited may now get back to it, retailers say. However, the sustainability of these recent increases will depend on whether gas prices remain high and whether customers can continue to pay for plans that offer free delivery.

E-commerce sales accounted for 15.9% of total U.S. retail sales in the first quarter, the highest since they peaked at 16.4% during the height of the pandemic in the second quarter of 2020, according to Commerce Department data.

Target said online sales returned to growth in the first quarter ended May 4 after more than a year of declines. She cited the increased number of products available online and the popularity of same-day delivery.

Larger rival Walmart reported a 22 percent increase in online sales in the U.S. last week, exceeding the 17 percent gain recorded during the typically strong holiday season.

Lowe’s says expanded same-day delivery partnerships with DoorDash and Shipt have helped it boost online sales and offset some of the slowdown seen in large projects.

Gas prices are also deterring Americans from driving to stores, according to Cox Automotive.

Target reported that comparable store sales fell 4.8% in the first quarter, while online sales rose 1.4%.

Walmart says consumers of all income levels are primarily influenced by price, but especially low-income customers. Upper-income shoppers are eager to visit Walmart.com because of the wider range of goods it now offers through a third-party marketplace.

Delivery was a big selling point because the services were offered at a higher price than in-store pickup, Walmart said. Target, meanwhile, has seen more customers using curbside pickup. The Drive Up offering generated more than $2 billion in sales in the first quarter.

U.S. retailers have invested heavily in online stores during the pandemic, offering benefits such as streaming subscriptions, gas discounts and multiple delivery options.

Walmart offers unlimited free deliveries for $98 a year with a Walmart+ subscription. In April, Target launched Target Circle 360, offering unlimited same-day delivery for $99 a year when subscribers complete a minimum shopping cart of $35.

No doubt some of the quarter’s sales gains were due to spring sales events that Walmart and Target held to compete with Amazon’s first-ever “Great Spring Sale” in March.

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Still, consumers spent $331.6 billion online from January 1 to April 30, 2024, up 7% from a year ago, in search of cheaper groceries, personal care, electronics, clothing and furniture, as says Adobe in this month’s report.

Brian Jacobsen, chief economist at Annex Wealth Management, suggested that Target’s digital sales growth could be attributed to heavy promotion of its Target360 free trial service. The company offered the service for $49 a year for several months, in addition to a 14-day free trial option.

“The key is to turn free trials into actual paid subscriptions,” he said.

Walmart attributed part of its online sales increase to a 45% increase in grocery and grocery recalls in April compared to the same period last year.

(Reporting by Siddharth Cavale in New York; Editing by Nick Ziemiński)