Online grocery rebounds (KR, ACI, WMT)
Online grocery sales grew 2.4% in December YOY according to the most recent Brick Meets Click/Mercatus survey after declining 10% in November. The increase was driven by more households buying groceries online and average order values up 6%. The order frequency fell 7% YOY with pickup increasing slightly and ship to home and delivery falling DD%. The online penetration of grocery shopping during the month was half of all households, up 4% points. The MAUs for mass retailers grew nearly three times faster than the 7% growth in MAUs for grocery stores.
Pickup grew 14.7% YOY with MAU growth of nearly 5%. Delivery decreased 1.8% YOY with MAUs slightly positive. Ship to home fell 16.2% YOY with MAUs down 8%. The online share of total grocery spending fell slightly YOY to 13.2% in 2022. Digital grocery shopping is unprofitable for nearly all companies. Grocers have invested significant sums in online grocery since the pandemic, but the mass retailers are winning online. One of the synergies between Kroger and Albertsons is to roll out Kroger’s superior e-commerce offering to Albertsons stores.
Price increase or no price increase? (CAG)
In an interview on January 10 with Reuters, Conagra’s CEO said, “We don’t currently have any plans to take additional pricing beyond that [some prices are increasing in the current quarter]. A week earlier during the company’s earnings conference call the CEO said, “We will continue to take appropriate inflation-justified pricing actions as needed.” There’s no change in strategy, it’s just the audience the CEO was addressing. Management does not have any plans to raise prices again based on current projections for costs AND if there is a need prices will be raised.
Letter to the FTC (KR, ACI)
The Western Growers joined the California Fresh Fruit Association and the Colorado Fruit & Vegetable Growers Association in opposing the Kroger-Albertsons merger. The trade groups wrote a letter to Lina Khan, chair of the FTC stating their reasons for opposing the combination. The trade groups say that they will be harmed by the shrinking competition in grocery as well as farmers, farm workers, farm communities, and consumers. The merger would even threaten national security. The merger will likely be contested by the FTC. Lina Khan will use similar letters from other groups in opposition when stating the government’s position, but the trade groups would have a difficult time proving anything they alleged in the letter.
