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U.S. egrocery sales ticked down slightly to start the year.
Brick Meets Click and Mercatus provided the following data for January 2023:
Total egrocery sales were $8.4 billion, down 1.2% year-over-year.
Total user base for egrocery sales declined 1.6% for the year, as the number of 30-44-year-olds dropped 5%.
Order frequency also declined, continuing a long-term trend since May 2020.
Ship-to-home sales dropped 15%, driving the drop.
Pickup increased 3%, showing strong gains.
Online grocery sales totaled 12% of overall grocery sales.
US egrocery sales for January (Courtesy of Brick Meets Click/Mercatus)
Mass vs. grocery
In egrocery, the story continues to be the dichotomy between mass retailers such as Walmart and Kroger, and grocery stores such as Kroger.
In January, the mass category saw a 20% increase in monthly active users. Meanwhile, the grocery MAUs shrank by 6%.
Mass retailers offering price breaks are continuing to be an attractive option, especially as prices remain high amid inflation. Still, there is crossover, as about 3 in 10 households that shop at a mass retailer also shop at a grocery store.
Repeat intent rates were also down. The likelihood that a customer will use the same service within the next 30 days dipped by about two percentage points over the year to 60%. In a “troubling sign” BMC said that this was driven by frequent customers who typically spend more per order.
Grocery also trailed in this measure, recording the largest gap in repeat intent with mass since measurement began at 14%.
“This large gap in repeat intent is concerning and should raise a red flag for conventional grocers,” said David Bishop, partner at Brick Meets Click, in a statement. “While our monthly research didn’t examine the causes for the variations between Grocery and Mass, it could be associated with a number of variables, including product pricing, service-related costs, or differences in customer experience, so grocers may want to analyze what are the main culprits driving their respective rates lower.”
Trending in Economy
Campbell Soup Company CEO Mark Clouse offered thoughts on messaging amid inflationary shifts in consumer behavior.
After months of elevated inflation and interest rate hikes that have the potential to cool demand, consumers are showing more signs of shifting behavior.
It’s showing up in retail sales data, but there’s also evidence in the observations of the brands responsible for grocery store staples.
The latest example came this week from Campbell Soup Company. CEO Mark Clouse told analysts that the consumer continues to be “resilient” despite continued price increases on food, but found that “consumers are beginning to feel that pressure” as time goes on.
This shows up in the categories they are buying. Overall, Clouse said Campbell sees a shift toward shelf-stable items, and away from more expensive prepared foods.
There is also change in when they make purchases. People are buying more at the beginning of the month. That’s because they are stretching paychecks as long as possible.
These shifts change how the company is communicating with consumers.
Clouse said the changes in behavior are an opportunity to “focus on value within our messaging without necessarily having to chase pricing all the way down.”
“No question that it's important that we protect affordability and that we make that relevant in the categories that we're in," Clouse said. "But I also think there's a lot of ways to frame value in different ways, right?”
A meal cooked with condensed soup may be cheaper than picking up a frozen item or ordering out. Consumers just need a reminder. Even within Campbell’s own portfolio, the company can elevate brands that have more value now, even if they may not always get the limelight.
The open question is whether the shift in behavior will begin to show up in the results of the companies that have raised prices. Campbell’s overall net sales grew 5% for the quarter ended April 30, while gross profit margins held steady around 30%. But the category-level results were more uneven. U.S. soup sales declined 11%, though the company said that was owed to comparisons with the quarter when supply chains reopened a year ago and expressed confidence that the category is seeing a longer-term resurgence as more people cook at home following the pandemic. Snacks, which includes Goldfish and Pepperidge Farm, were up 12% And while net sales increased overall, the amount of products people are buying is declining. Volumes were down 7%.
These are trends happening across the grocery store. Campbell is continuing to compete. It is leading with iconic brands, and a host of different ways to consume them. It is following that up with innovation that makes the products stand out. Then, it is driving home messaging that shows consumers how to fit the products into their lives, and even their tightening spending plans.
Campbell Soup is more than 150 years old, and has seen plenty of difficult economic environments. It is also a different business today, and will continue to evolve. At the end of the day, continued execution is what’s required.
“If it's good food, people are going to buy it, especially if it's a great value,” Clouse said.