Online grocery sales hit a near-high in December 2022.
Online grocery retailers ended the year strong with $9.1 billion in total sales in December 2022, up 2.4% year-over-year.
According to the monthly Brick Meets Click/Mercatus Grocery Shopping Survey, this monthly U.S. online grocery sales figure is only 2% lower than the record high of $9.3 billion last seen in the first quarter of 2021. More than half of all U.S. households ordered groceries online during December, up 4% year-over-year (YoY).
Survey data indicates December’s strong monthly sales results and year-over-year gain were driven by a combination of more households buying groceries online during the month and slightly higher average order value (AOV), although these still trailed the rate of grocery price inflation.
Gains in AOV were partially offset by lower order frequency among monthly active users (MAUs) in December, the survey indicates. Online grocery sales by receiving method and format were mixed compared to the same month in 2021. Pickup was the only online grocery fulfillment method to gain sales during December 2022, up 14.7%.
Online grocery sales fulfilled by delivery declined very slightly, down 1.8% YoY, and ship-to-home dropped more dramatically, down 16.2% YoY. As seen in November 2022, orders placed with mass retailers contributed more significantly to the growth of total online grocery sales than orders placed with grocery retailers. Survey data suggests this higher growth in online grocery sales at mass retailers is being driven by changes in the two formats’ MAUs, order frequency, and AOVs.
Cross-shopping between grocery and mass retailers grows
The level of cross-shopping between the grocery and mass segments remained elevated for the second month in a row, which survey analysis indicates is likely driven by persistent inflation and/or a more acceptable experience driving customer expansion in the mass segment. During December, more than 30% of MAUs bought groceries online during the month from both grocery and mass, about 1.3 percentage points higher YoY.
Composite repeat rate drops
From a topline perspective, the composite repeat rate (the likelihood that customers will use the same service again within the next month) dropped 6.7 percentage points to 56% for the month compared to December 2021.
The majority of the year-over-year decline was driven by first-time users, according to survey data. However, customers who used a service four or more times in the past month also contributed, although their rate dropped by about half as much as the first-timers’ rate. While repeat intent rates were down for both the mass and grocery segments in December, mass continues to outperform grocery on this metric.
Compared to December 2021, mass has gone from having parity with grocery on repeat intent rate to more than a 10-point advantage for December 2022, due to grocery’s significant drop during the month.
Customers place orders less frequently
Overall order frequency, defined as the number of orders received by an MAU on average during the period, slid 7% YoY at the aggregate level. By service method, ship-to-home’s order frequency shrank twice as much as this aggregate rate.
Delivery’s drop wasn’t as severe, but still declined by a double-digit percentage; and pickup saw order frequency grow slightly. By format, order frequency decreased by 7% in grocery and increased 3% in mass.
Value of orders climbs
For December, AOV across the three receiving methods grew about 6% YoY on an aggregate basis, which is below the rate of grocery-related price inflation. Pickup AOV for the month was slightly above the aggregate average, while delivery AOV matched the aggregate rate and ship-to-home posted a mid-single-digit YoY decline.
By format, grocery reported a 4% YoY gain in AOV, while Mass AOV’s grew three times faster with a 12% YoY increase in AOV during December.
“The investments that mass retailers have put into their pickup services are a significant driver of the format’s gains,” said David Bishop, partner at Brick Meets Click. “And while lower prices are a contributing factor in the growth of the Mass MAU base, being able to more consistently execute at the store level is also helping to strengthen retention and engagement with existing customers, especially when compared to grocery.”