The U.S. online grocery market finished December with$9.1 billion in total sales, up 2.4% compared to a year ago, and only 2% lower thanthe record high of $9.3 billion last seen in Q1 of 2021, according to the monthly BrickMeets Click/Mercatus Grocery Shopping Survey fielded December 28-29, 2022.

December’s strong monthly salesresults and year-over-year gain was driven by positive trends for Pickup and Mass including a combination of more householdsbuying groceries online during the month and slightly higher average ordervalues (AOVs) although these still trailed grocery price inflation.

“The investments that Massretailers have put into their Pickup services are a significant driver of theformat’s gains,” said David Bishop, partner at Brick Meets Click. “And while lower prices are a contributingfactor in the growth of the Mass MAU base, being able to more consistentlyexecute at the store level is also helping to strengthen retention andengagement with existing customers, especially when compared to Grocery.”

Key Findings: Dec 2022 YOY

Sales trends: Mixed results for receiving methods andformats

Pickup was the only method to gain salesduring December, up 14.7%. Delivery declined very slightly, down 1.8%, and Ship-to-Homedropped more dramatically, down 16.2%.

Aswith November trends, orders placed with Mass retailers contributed moresignificantly to the growth of total online grocery sales than orders placedwith Grocery retailers, driven by changes in the two formats’ MAUs, average order value (AOV), and orderfrequency.

Base of montly active users (MAU) up

More than half of all U.S.households ordered groceries online during December, up 4% versus year ago.

• Pickupbenefited the most from this increase in demand as almost 5% more MAUs opted touse this receiving method in December. Delivery was slightly positive, andShip-to-Home experienced a drop of more than 8% in MAUs.
• By format, while the GroceryMAU base climbed nearly 7% versus the prior year, the Mass MAU base expandednearly three times faster and attracted almost half of the total MAU base inDecember.

Cross-shopping between Grocery and Mass climbs to 30%

During December, morethan 30% of MAUs bought groceries online during the month fromboth Grocery and Mass, about 130 basis points higher than a year ago.

The level of cross-shopping betweenGrocery and Mass remained elevated for the second month in a row, likely drivenby persistent inflation and/or a more acceptable experience driving Mass’customer expansion.

AOV up overall YOY but mixed trends by method/format

For December, spending per order across the three receivingmethods grew about 6% versus last year on an aggregate basis, which is belowgrocery-related price inflation.

By method: Pickup’s AOV for the month was slightly abovethe aggregate average while Delivery matched the aggregate and Ship-to-Homeposted a mid-single digit decline.

By format: Grocery reported a gain in AOV of4% versus last year while Mass AOV grew three times faster with ayear-over-year increase of 12% for December.

Order frequency down overall YOY but mixed trends by method/format

Overall order frequency, defined as the number of ordersreceived by an MAU on average during the period, slid 7% versus December 2021at the aggregate level.

By service method -

• Ship-to-Home’s order frequencycontracted twice as much as the aggregate.
• Delivery’s drop wasn’t as severe butstill a double-digit decline.
• Pickup saw order frequency grow slightly amongits MAUs.

By format, order frequency continued to show divergent year-over-yeartrends as it decreased by 7% for MAUs of Grocery and increased 3% for MAUs of Mass.

eGrocery share of spending down

Total grocery spending during the last week of Decemberclimbed nearly 15% versus the same period last year.

• As a result, the online shareof total grocery spending fell slightly versus the prior year, finishing at13.2%.
• Excluding Ship-to-Home, since most conventional supermarkets don’t offerit, the adjusted contribution from Pickup and Delivery was 11.0% for the month.

Composite repeat intent down: Grocery lags Mass by 10+ points

From a top-line perspective, the composite repeat rate (thelikelihood that customers will use the same service again within the next month)dropped 670 basis points to 56% for the month versus year ago.

• The majority ofthe YOY decline was driven by first-time users.
• Customerswho used a service four or more times in the past month also contributed, althoughtheir rate dropped by about half as much as the first-timers’ rate.

While repeatintent rates were down for both Mass and Grocery in December, Mass continues tooutperform Grocery on this metric.

• Mass and Grocery were at parity on this measure in Dec. 21
• For Dec '22, Mass gained a 10-point advantage driven by Grocery’s significant drop during the month.

Sponsor Message & Appreciation

“Regionalgrocers have many opportunities to improve the customer experience and theprofitability of operating an online grocery service today,” offered SylvainPerrier, president and CEO at Mercatus. “From our ongoing work and researchinto online customer behavior, we’ve learned how important it is to develop astrategy that makes sense both financially and operationally, and that builds onhow a grocer is positioned in the market and with their core customers.”

We thank the team at Mercatus for their continued generous support of this research. Click here to see the January 10, 2023 press release.

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About this consumer research

The Brick Meets Click/Mercatus Grocery Shopping Survey is anongoing independent research initiative created and conducted by Brick MeetsClick and sponsored by Mercatus. Brick Meets Click conducted the survey on December28-29, 2022, with 1,715 adults, 18 years and older, who participated in thehousehold’s grocery shopping.

The three receiving methods for online grocery orders aredefined as follows:

• Delivery includes orders received from afirst- or third-party provider like Instacart, Shipt or the retailer's ownemployees.
• Pickup includes orders that are received bycustomers either inside or outside a store or at a designated location/locker.
• Ship-to-Home includes orders that are receivedvia common or contract carriers like FedEx, UPS, USPS, etc.

Results were adjusted based on internet usage among U.S.adults to account for the non-response bias associated with online surveys.Responses are geographically representative of the U.S. and weighted by age toreflect the national population of adults, 18 years and older, according to theU.S. Census Bureau. Brick Meets Click used a similar methodology for each ofthe surveys conducted in 2022 – Nov. 29-30 (n=1,749), Oct. 28-29 (n= 1,732), Sept. 29-30 (n=1,752), Aug. 29-30 (n=1,743),July 29-30 (n=1,690), June 29-30 (n=1,743), May 28-29 (n=1,802), Apr. 28-29 (n=1,746), Mar. 28-29 (n=1,681),Feb. 26-27 (n=1,790), and Jan. 29-30 (n=1,793); in 2021 – Dec. 29-30 (n =1,836), Nov. 29-30 (n=1,785), Oct. 29-30 (n=1,751), Sept. 28-29 (n=1,728), Aug.29-30 (n=1,806), July 29-30 (n=1,892), June 27-28 (n=1,789), May 28-30(n=1,872), Apr. 26-28 (n=1,941), Mar. 26-28 (n=1,811), Feb. 26-28 (n= 1,812),and Jan. 28-31 (n=1,776); in 2020 – Nov. 11-14 (n=2,067), Aug. 24-26 (n=1,817),Jun. 24-25 (n=1,781), May 20-22 (n=1,724), Apr. 22-24 (n= 1,651), and Mar.23-25 (n=1,601); and in 2019 – Aug. 22-24 (n = 2,485).

Photo Credit: Cindy Christian, Tucson, AZ, 2023