The Industry Impact | 2020 Food Retail Year-End Review

Back in March, the world changed for us all, and grocery and convenience stores were designated as “Essential Businesses”. None of us could have fully predicted the impact COVID-19 would have on the fresh food industry in the nine months that followed.

2020 Trends Recap

Early on in the pandemic, we saw sales spike as there was an initial phase of panic shopping. From toilet paper to cleaning products and pantry basics, consumers couldn’t get their hands on some products fast enough, leaving out of stocks on product shelves for most retailers. During this time, home cooking soared resulting in increased purchases of many fresh foods while prepared foods from the deli and bakery were viewed as a potential risk.

As consumer demand changed, a large number of food retailers and CPG providers weren’t ready to support the changes. Many retailers’ systems and processes couldn’t handle the large volume of sales, and CPGs lack of extra transportation strained availability even more.

As things stabilized in late April and into May, consumers kept their number of trips to the store down but increased their basket size, spending more on comfort foods and demanding more options for cooking at home. Due to economic uncertainty, many consumers became more price-conscious. They decided to opt for value over brand and shopped for new items or switched their brand loyalty to less-expensive brands and private labels. According to an Inmar Intelligence survey in November 2020, 70% of consumers have actively looked for less expensive options, including non-meat alternatives (due to temporary meat production issues, consumers have faced significant price increases on meat during the pandemic).

Inmar Pandemic Grocery Brands Survey-Chart 2

Perhaps the biggest trend for food retailers and consumers over the last 9 months has been the accelerated growth of online shopping. According to Nielsen, before the pandemic, online shopping only represented 4% of grocery sales, but since March, consumers have significantly increased their online shopping and retailers have been forced to reprioritize their growth strategies to expand online by investing in new capabilities for online ordering and fulfillment. The growth of online grocery sales that was expected over a 10-year timeframe happened in 6 months.

As grocery stores have seen record numbers during this time, many convenience stores have struggled to find their footing as store traffic has dropped significantly due to the decline in commuters. As many compete to gain back business, they have had to accelerate their online offerings. For them to stay convenient they must adapt to the demands of the new world we live in. Prior to the pandemic, eCommerce was often merely a discussion for the future for many convenience retailers. Now according to the latest CSP magazine’s “At Your Convenience” podcast, online shopping, curbside pickup, and last-mile delivery is no longer a maybe but a must-have for convenience stores to compete and stay in business.

As 2020 comes to an end, it is clear that technology-focused food retailers will be positioned well for success. From forecasting inventory demands both in-store and online to tracking made to order items to meet at-home eating needs, retailers are using technology to adapt and hit the ground running into the new year. 

Here's to a prosperous New Year for all! Stay tuned next month for our 2021 Insights and Expectations.

About the Author

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Jesus Mathus is the Global Head of Retail Solutions at ADC where he is responsible for bringing the point of view of our retail customers on everything we do. Prior to joining the ADC team, Mathus was the Chief Information and Supply Chain Officer for Cardenas Markets, a grocery chain based in Southern California. At Cardenas, Mathus was responsible for setting the IT strategy to transform its technology platform as well as the supply chain growth plan to support the business as the company expanded its national footprint. Before his time at Cardenas, Mathus was the Chief Information Officer for Bodega Latina Corp (dba El Super) where he led the transformation of the company's technological platform to improve overall profitability and market share.