As the pandemic changes shopping behaviors, retailers are experiencing peak sales in center store — both online and in-store
The key for grocery retailers will be maintaining their lofty orbits amid the gravitational pull of restaurants and the reopening of schools and businesses.
Consumers have been loading their pantries and freezers, baking bread and pies, and trying new recipes to replicate the experiences they had traditionally enjoyed while dining out. Retailers and their manufacturer partners will seek to retain those customers — many of whom are new buyers of center store items — as the nation lurches toward recovery.
Many of the underlying trends that had been transforming center store in recent years, such as consumer interest in health and wellness, clean labels and sustainability, will continue to resonate going forward, said Sally Lyons Wyatt, executive VP and practice leader, client insights, IRI.
In fact, some of the trends around health and wellness may be accelerated, as consumers seek treatments to better manage some of the ailments that put them at risk for complications from COVID-19, such as diabetes and heart disease.
Consumers have also become more interested in nutrients such as antioxidants and certain vitamins, and products to support immunity and gut health, she said. She cited increasing demand for CBD as another trend that can be expected to continue.
Another key trend that may be impacted by the pandemic is consumers’ reliance on e-commerce for center store items. Grocers that offered full-basket solutions and curbside pickup were the winners in the battle for e-commerce share, said Keith Anderson, senior VP of strategy at Profitero.
Consumers are finding plenty of reasons to pour themselves a strong drink during the pandemic, and that translated into double-digit gains sales for supermarkets in alcoholic beverages. Sales data from IRI showed supermarket dollar sales of spirits/liquor up 13.7% for the 52 weeks through May 17, to $4.1 billion, the largest percentage gain of any beverage category. Sales of beer/ale/alcoholic cider were also strong, with gains of 11.7%, to $12.4 billion.
Among non-alcoholic beverages, energy drinks and sports drinks were two of the top performers in the 52 weeks through May 17, with supermarket dollar sales gains of 12.8% and 10.3%, respectively. Sales of these drinks may have been driven in part by their functionality, said Colin Stewart, executive VP, Business Intelligence, at Acosta.
With many families sheltering at home during the early stages of the pandemic, sales of carbonated drinks also saw strong increases, Lyons Wyatt said.
Consumers have been shopping the non-alcoholic beverage category differently, however, noted Scott Owen, senior grocery merchandiser at PCC Community Markets. Single-serve refrigerated beverage sales have decreased at that chain, he said, as the stores have seen reduced lunch and dinner traffic. However, sales of multi-serve beverages “have increased significantly.”
“People are staying home more, and still want a normal offering of products,” Owen said. “Now, they just buy a case for home instead of opting for single-serve on the go.”
Consumers have not abandoned their embrace of better-for-you snacks, despite partaking in some more indulgent options while cooped up at home during the pandemic.
As consumers worked from home, and schools were closed, families kept an ample supply of snacks in the pantry, said Darren Seifer, NPD Group food and beverage industry analyst.
NPD found that in April, 37% of consumers said they wanted to make sure they had sufficient snack foods on hand, and they were especially well-stocked on both salty snacks and frozen sweets, which led to higher rates of consumption.
“We’ve seen consumers turn to indulgent snack foods in other challenging times, and although history isn’t repeating itself during COVID, it is rhyming,” said Seifer.
Although many of the top snack categories did not see the double-digit sales gains of other center store categories, their growth was still impressive, given the relatively large sales volume that these products generate to begin with, said Sally Lyons Wyatt, executive VP and practice leader, client insights, IRI.
“They have been moving big volumes,” she said. “All of the top snack products were doing extremely well.”
Perhaps the only thing that concerned consumers more than becoming infected with the coronavirus during the early days of the pandemic was their ability to get toilet paper.
As demand skyrocketed for bathroom tissue, hand sanitizer, paper towels and other cleaning products, retailers around the country imposed purchase limits and looked for alternative sources for these items in order to remain in stock.
“The demand for hand sanitizer was larger than supply at the start,” said Terry DeBlasio, HBC merchandiser at PCC Community Markets in Seattle. In addition to hand sanitizer and soap, consumers were also seeking OTC remedies to bolster their health and immune systems, including elderberry, echinacea and vitamins, she said.
“For three weeks in March, we averaged a 78% lift across the entire Health and Body Care department,” DeBlasio said.
Not all nonfoods items experienced booming demand during the pandemic, however, said Sally Lyons Wyatt, executive VP and practice leader, client insights, IRI, citing cosmetics as an example.
Overall, household cleaning products and vitamins, supplements and OTC medications powered nonfoods sales growth, with double-digit dollar gains reported for toilet tissue, vitamins, paper towels, soap, cold/allergy/sinus tablets, internal analgesics and household cleaners.
Sales of frozen foods had already been growing steadily before the pandemic, but consumers’ desire to stock up drove sales to new levels as shoppers stuffed their freezers to maximum capacity.
Sales of frozen meats and seafood surged when concerns arose about the availability of fresh meats after several processing plants shut down. Meat sales from the freezer case have remained high since then, even as the rate of growth has slowed, said Sally Lyons Wyatt, executive VP and practice leader, client insights, IRI,
IRI reported supermarket dollar sales growth of 12.7% for frozen pizza and 10.4% for breakfast items for the 52 weeks through May 17. The biggest gainers in freezer-case sales were appetizers and snack rolls, with sales up 17.7% in supermarkets, according to IRI.
Sales of frozen foods could have been even higher if inventory had been available to satisfy demand, said Robert Rybick, president and CEO of Geissler’s Supermarkets. “Unfortunately, the supply chain was not ready for it, and there were some long-term outages, especially in the vegetable and fruit categories,” he said.
Research from the American Frozen Food Institute found that 70% of consumers bought more frozen foods after the pandemic began, 68% said they bought different frozen items, and 72% said they selected different brands.
AFFI reported that 85% of consumers who ordered groceries online during the first five weeks of the pandemic included frozen foods in their order. This compared with 73% before the pandemic, according to AFFI’s Power of Frozen 2020 report.
To bake or not to bake? The answer to that question has been clear for many households throughout the pandemic, helping drive sales gains in the baking products category and boost shelf-stable grocery sales overall. With many restaurants reopening and the weather warming, the question has become whether or not consumers will continue to spend time baking.
Sales trends showed that the baking products category only slowed slightly in May and June, according to Sally Lyons Wyatt, executive VP and practice leader, client insights, IRI, who thinks the baking trend may have some staying power.
In addition consumers were also stocking up on shelf-stable goods that made meal prep easier, including pasta and pasta sauces and canned soup, vegetables, meats and seafood.
Colin Stewart, executive VP, Business Intelligence at Acosta, said many center store categories and brands have been reinvigorated by the pandemic, as at-home eating occasions increased. “We expect this trend to continue as shoppers stock up and ride out the uncertainty of the next few months,” he said.
Many buyers of shelf-stable meal builders had not typically purchased these items in the past, said Lyons Wyatt. That creates what she described as an “amazing opportunity” for both manufacturers and retailers to retain these new shoppers by reminding them how they can use these items in different ways and for different occasions going forward.
