This is another slang term for "knocking boots" "bumping uglies" "horizontal mambo/tango" "doin' it" "the no pants dance" "the good ol' in and out" or, as many refer to it, SEX!
"So I went over to her place and get this...I totally bagged her groceries"
"He-man, do you have a condom...I think I am going to bag Sheera's groceries tonight."
"Naw man, she is a total prude! I couldn't bag her groceries if I paid for it."
"We should go out tonight, get some drinks, hang with some buddies, talk to some girls, and maybe even bag some groceries."
"Hey Brian, how is it going? I am writing this to let you know that I think things are finished between the two of us! You are a caring, sweet guy, and lord knows, you bagged groceries with the best of 'em, but we are growing apart and things change. I will always appreciate our time together...goodbye."