Grocery sector is the front line for new challenges, opportunities
As the economy reopens, what will be the lingering impact of COVID-19 on the way Canadians live, work and shop – and what will it mean for businesses, communicators and marketers?
To inform our thinking about what’s next and how clients can be ready for the recovery, Argyle’s Agribusiness and International Trade team interviewed Mary Scianna, the Editorial Director of Grocery Business magazine. Here are our questions, and her answers.
What impact has COVID-19 had on the grocery sector?
The industry has had to adapt quickly. Consumers have changed shopping behaviours, leading to a surge in online grocery services, and the emergence of e-commerce start-ups to capitalize on this trend.
The speed at which safety measures were put in place in grocery stores across the country is remarkable, from plexiglass shields and in-store temperature checks, signage for social distancing, dedicated hours for seniors/vulnerable people and services for frontline healthcare workers, to temporary pay increases for grocery retail and supply chain workers.
Grocery retailers and supplier partners have maintained high levels of transparency about measures being taken to protect customers and employees. And, we have seen inspiring instances of dedication and heroism exhibited by frontline grocery employees.
What food purchasing trends have emerged?
Research data on consumer shopping behaviour has shown an increase in the purchase of condiments and confectionery. Data we have from Nielsen (week ending April 11), shows that sales of condiments and sauces were up 8% with actual sales at $93.2 million. Confectionery sales for the week ending April 11, 2020 were $96.2 million: 113% more than the average typical week of previous years.
We have also seen a huge surge in consumer-packaged goods. Our research partners generally measure sales in four-week periods, year-over-year and in early April, there was a 63% sales increase for General Mills (Cheerios, Haagen-Daaz, Pillsbury), 50% increase for Kraft Heinz, 37% increase for Mondelez International and Kellogg, 33% for Nestle and 25% for Hershey. While at first grocers were focusing on the top-selling products to deal with these volume increases, we are now seeing a greater variety of new products on the shelves – therefore new product innovation and introduction remains viable.
One of the silver linings that has emerged from the COVID pandemic is that people are now shopping centre of store and being re-introduced to brands and categories they may have forgotten about when they were shopping the perimeter of store for fresh foods. As consumers look for pantry staples, brands have an opportunity to launch innovative products to capture consumer interest in these specialty food areas.
What are the long-lasting effects of the pandemic?
The pandemic raised alarm bells for many about the safety and origin of the food we eat. I have read much about “buying local” because of concerns with securing imported products, and to a certain degree, diminished trust in products from some countries because of perceived safety concerns.
According to recent data from Nielsen, 15% of Canadians were already buying local and we expect demand for local fresh produce to rise. The challenge for both grocery retailers and the supply chain will be providing local fresh produce year long. Canada’s short growing season and the many greenhouses that have converted to growing cannabis, means that the industry will still be relying heavily on foreign imports for fresh food.
Post-pandemic, the challenge will be to provide customers with a back-to-normal shopping experience and maintaining consumer interest in those prepared foods, snack foods and baking products that make up the centre of store, which is outperforming the perimeter today.
How are online grocery sales changing?
The online trend has been emerging for some time, but COVID accelerated the jump in e-commerce. One study commissioned by Walmart and PayPal showed a spike of 58% in just four weeks from mid-March to early April. The surge in use of online shopping highlighted a weakness – the infrastructure buckled with the high volume of orders and many platforms had delays of five to ten days in getting online orders delivered to customers.
Pricing, quality and buying local must all be part of the mix to grow e-commerce orders, just as it is inside the store. There may be more of a focus now on promoting e-commerce to take advantage of the interest created by the crisis.
About Grocery Business
Grocery Business is a must-read business publication for the grocery professional in Canada that consistently provides insightful data on the trends and people shaping the industry.
How can Argyle help you?
Argyle has been tracking the effects of COVID-19 on the food supply chain in Canada. Our previous report focused on changing consumer food shopping behaviours in the early weeks of the pandemic. How can Argyle’s agribusiness team help you? Please let us know at email@example.com.