US Food Retail: Where Did Consumers Go During Covid-19? Six Learnings From Spending Data
While the fact that food retailers have benefited enormously from stay-at-home orders and restaurant closures is hardly news, a deeper look into credit/debit card transactions reveals their different impacts across food retail categories in both brick-and-mortar and online environments. We translated these data points into six learnings from the most eventful year in the food industry in generations, as well as into insights as to how players can sustain the momentum in a post-Covid economy.
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- Online is the big winner, but summer may bring a temporary halt. Recent data indicates a likely temporary halt to this expansion in Q2 2021, as cases drop, the economy reopens, and weather warms up.
- Introducing the online discounter. Discount shoppers have adopted online groceries the most, as discount grocers lowered fees for delivery and hybrid services and rolled out other affordability measures to attract more price-sensitive consumers.
- Online growth was driven by more orders, not higher order value. Online grocers benefit from a higher average transaction (basket) the most. But the average basket hasn’t grown during Covid, which has restricted further gains in cost optimization and profitability.
- A tale of two extremes for premium & natural grocers. The premium & natural segment has been impacted by a major drop in traffic, as consumers opted for one-stop shops and traditional portfolios. However, the segment has expanded basket size the most among all brick-and-mortar retailers.
- A second chance for meal kits? Transaction data indicates consumers have stuck to regular deliveries and consistently increased average spending throughout the pandemic year.
- No major impact from macro and stimulus. We couldn’t correlate food retail spending with extreme macroeconomic volatility and the three stimulus packages. This contrasts with what happened on the foodservice side, which directly and positively correlated with stimulus release and economic recovery.
As life goes back to what it looked like before Covid-19, the data presented here can illustrate and explain the unusual time in history we are finally leaving behind. “Though most of the trends highlighted by the data preceded the pandemic, they were definitely accelerated by it. If some sort of adjustment is underway, the transformation seen in the past 15 months is unlikely to fully revert, or even be disregarded by industry executives in their future decisions,” according to JP Frossard, Analyst – Consumer Foods. “We cannot rely on data from the past to explain the future, but be sure about one thing: We will be talking about Covid-19 for quite some time, and proper understanding of its impact across different categories is the first step in getting prepared for what’s next… whatever that may be.”
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JP FrossardAnalyst – Consumer Foods