Shoppers Show Purchase Shift From Comfort to Value

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Shoppers Show Purchase Shift From Comfort to Value

By Thad Rueter - 06/23/2020

From Progressive Grocer, June 19:

Consumers turned to such comforts as ice cream, alcoholic beverages and cigars to get through the first phases of the pandemic this spring, and maybe all the stress associated with loss of income and having to stay at home. But the second half of 2020 could bring a renewed consumer focus on value and more desire for away-from-home retail trips and similar experiences.

IRI on Friday released a new report entitled “The Changing Shape of the CPG Demand Curve — Tracking Transformation of the Retail Landscape,” and the findings provide help in trying to figure out what comes next in this extraordinary year.

Food retailers, of course, have been luckier than most merchants during the COVID-19 outbreak, remaining open and recording spikes in revenue and digital sales. As IRI documented, grocery shoppers increasingly turned to edible products or items often considered indulgent as the virus swept through the country. Some products — ice cream and sherbet, and spirits and liquor — experienced monthly sales increases that exceeded 40%, at least as it comes to retail items described as “convenient.”

More broadly, these new IRI findings demonstrate that “e-commerce, dollar and grocery are the big gainers in sales and traffic, with e-commerce expected to continue gaining post-pandemic,” according to the organization. “Edible aisles have driven sales growth in grocery and mass channels, where increased traffic is also leading to strong sales for non-edible aisles; assortments have fallen across aisles and channels.”

As well, as more retail stores began to reopen last month, “convenience sales recovered stronger in May” than other merchant categories, IRI said.

FUTURE TRENDS

So what’s next for retail and consumption habits?

For one, expect consumer habits set during the pandemic to stick around at least for a while.

“We expect measured channels’ CPG sales to remain elevated through 2021, driven by lingering stay-at-home behaviors as out-of-home activity returns, but decline in 2021 vs. 2020,” IRI said. “2020-21 growth will be higher than prior years and there will be more sales in e-commerce.”

One trend driving those stay-at-home shopping habits is that many workers, especially white-collar employees, will keep laboring from home for months to come. But unemployment bonuses and other stimulus payments are going to run out soon, in general. That will also impact retail in the second half of 2021.

“As economic stimulus and extra unemployment support run out/ decrease, value seeking and in-home consumption increases,” IRI said.

No matter what, food retailers can expect to have a leading commerce role in the coming months.

“Grocery growth should continue to outpace other channels in 2020 as consumers continue to make large, edible-focused trips,” the new research found. “Convenience will rebound somewhat as mobility returns, but weak income limits growth.”

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