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U.S. egrocery sales finished 2022 near record highs, offering another sign that the pandemic uptick in this ecommerce category is proving to be sticky.
Key data from the Brick Meets Click/Mercatus Grocery Shopping Survey for December 2022, fielded Dec. 28-29, is as follows:
- Total sales reached $9.1 billion, growing 2.4% year-over-year.
- That’s just shy of the all-time record, recorded during Q1 of 2021, which was $9.3 billion.
- More than half of US households ordered groceries online during the month, which was up 4% year-over-year.
Here’s a look at key data by category of egrocery:
- Pickup sales were up 14.7% year-over-year
- Delivery was down slightly to 1.8%
- Ship-to-home fell 16.2%
via Brick Meets Click/Mercatus
Mass retailers, which include multicategory stores like Walmart, Amazon and Target, were the biggest contributor to gains, outpacing contributions from pure-play grocers. The monthly active user base at mass retailers grew nearly three times faster than the overall MAU base, accounting for nearly half of the total MAU base on the month. Mass AOV also grew three times faster than grocery, with a year-over-year increase of 12%.
It’s true that mass retailers have been attracting new shoppers amid inflation as people seek lower-price options to stretch dollars. That was on view in December, as more than 30% of users cross-shopped at both mass and grocery retailers. But mass retailers have also continued to improve the ecommerce capabilities, creating a better experience for customers.
The two trends are connected. Walmart executives illustrated this on their recent earnings call: The retailer is seeing more affluent customers seek it out as they look to save money. At the same time, Walmart is working to keep these customers coming back by bolstering pickup and delivery, as well as increasing perks through the membership program Walmart+.
“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, in a statement. “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.”
Hammering the point home, mass retailers also outperformed grocery stores when it comes to repeat intent rates, which measures the likelihood that customers will use digital grocery again. In this category, mass and grocery were about even in 2021. Now, mass has an advantage of more than 10 points.
This serves notice to pure-play grocers that the competition for share is only picking up. With sales continuing to grow, adding digital capabilities is just as much a must now as it was at the start of the pandemic.
“Regional grocers have many opportunities to improve the customer experience and the profitability of operating an online grocery service today,” said Sylvain Perrier, president and CEO at Mercatus. “From our ongoing work and research into online customer behavior, we’ve learned how important it is to develop a strategy that makes sense both financially and operationally, and that builds on how a grocer is positioned in the market and with their core customers.”
Trending in Retail Channels
The partnership brings together subscriptions and shoppable content.
Roku and DoorDash are teaming up to connect TV and food delivery in one experience.
The news: Roku and DoorDash announced a new partnership that will allow people to order food delivery from a shoppable ad on their TV. Along with the capabilities being put in place by the tech platforms, Wendy’s is also adding shoppable content that will provide a discount on ordering at launch.
How does it work? For Roku account holders, there are three parts to the partnership:
DashPass: DoorDash is providing a complementary six-month DoorDash subscription. Called DashPass, this provides $0 delivery fees on orders from restaurants, grocery and retail stores on DoorDash’s marketplace.
Shoppable ads: Roku viewers will be able to click from their remote to order straight from ads on Roku via offers provided through DoorDash. For the first year, DoorDash will be the exclusive ad solution provider for restaurants on its marketplace to buy shoppable ads on Roku. With this, restaurant advertisers will also be able to work with DoorDash to attribute, target and measure TV streaming ads.
Wendy’s: The companies said Wendy’s also upped its digital capabilities as part of this partnership. The chain will make offers available through the shoppable ads. At launch, it will provide $5 off any Wendy’s purchase of $15 or more.
Key quote from Rob Edell, GM and head of consumer engagement at DoorDash: “While this offer unlocks DashPass benefits and perks for Roku users everywhere, it also provides our merchant partners with an opportunity to promote DoorDash offers through TV streaming. Consumers can conveniently and affordably get the best of their neighborhood delivered to their door, while brands can reach diners at the right time and drive instant conversion from the comfort of the living room.”
What it shows about commerce
The partnership is a sign that several different strategies being employed in digital media and commerce are converging:
Streaming and delivery: Watching TV and ordering food is a common behavior. In fact, Roku research indicates that one in three users order takeout or food delivery weekly. The partnership shows how there is room for the platforms that provide each of these distinct services to work together. It's a reminder not just to monitor how customers use your product, but what other products and services they use with it.
Shoppable ads and subscriptions: As digital commerce grows, there’s interest in reducing the steps between when a user thinks about making a purchase, and when they actually click “Buy.” This partnership does that in a couple of ways. With shoppable ads, Roku viewers can order directly from their TV, and even within the show they are watching. Switching devices may be a barrier, however small, to a sale. On DoorDash’s side, putting a subscription in place means users don’t have to think about logging in or consider delivery fees. This shows how introducing more interactive capabilities to streaming can open up new opportunities for commerce. Roku data shows that 36% of its users are interested in receiving interactive offers, such as a scannable QR code or text message. Such capabilities allow users to take action without switching screens.
Retail media and CTV: On the advertising side, the partnership is connecting DoorDash’s ad network with Roku’s content capabilities. DoorDash operates as a marketplace, while Roku serves ads during streaming content. Both have powerful customer data. DoorDash has purchase-level, or first-party, data. Roku has data on millions of customers, and the ability to reach them while they are doing the common activity of watching TV. The platforms also both have the ability to target users and measurement capabilities that can make this whole system even more powerful. While this partnership sets out one way the companies will work together immediately, it’s a safe bet that the partners will find other areas of mutual benefit to explore.
Further reading: It’s just the latest move by Roku to bring shoppable content to the platform. Last year, the streamer partnered with Walmart to pilot direct ordering straight from shoppable ads.
Is Amazon next? Break down the individual parts of this partnership: Subscription, delivery network, marketplace, streaming platform, advertising capabilities. Amazon owns each of these, and it even has a restaurant delivery partnership with Grubhub. Will it put these parts to work in a similar way? The better question may be, how long until it does so?