As I reflect on Q3 2020, there are a number of highlights and key takeaways that have impacted food retailers as we head into the seventh month of this COVID-19 world. What we have seen over the months of July, August, and now into September has started to shift from what we originally saw back in the early days of the pandemic of March through June.
We all remember the panic shopping that spiked back in March. From people hoarding toilet paper and antibacterial wipes to stockpiling their pantries and freezers. More and more people started buying fresh food and cooking at home. Due to these unusual conditions, the supply chain was strained to meet demand and store shelves could not get restocked fast enough.
Grocery sales were off the charts in March and April, hitting numbers that had never been seen before. Though sales have come down since those skyrocketing months, the fresh perimeter, especially the meat department, continues to see record numbers. Year-over-year results for nearly all categories continue to be strong and everyday demand continues to beat that of the same period last year.
Interesting sales highlights:
- Meat continues to comp in the high teens, with Fresh lamb seeing a 35% growth in sales.
- Fresh produce has regained much of the share it lost to frozen/canned goods during early panic buying and is performing strongly reaching two-digit comps almost every week.
- Fresh vegetables are outperforming fresh fruit.
As the industry stabilized, a major emphasis for consumers and retailers was placed on online sales. No surprise, but more and more consumers turned to online ordering.
The Future of Fresh
Hearing the phrase, the “new normal” in everything we do has become commonplace, but what is the “new normal” for the grocery industry? What can we anticipate for the future of Fresh? Is anything in the retailers’ control?
Based on recent surveys, many consumers expect to remain cooking at home for the foreseeable future, and 54% aim to have 2 to 4 weeks of food on hand at any given time. Another trend that is expected to continue is that of online grocery shopping. Prior to COVID, approximately 25% of consumers used an online channel for ordering groceries. Projections for grocery shopping show a 41% growth in online purchases, and that number is expected to remain.
With more consumers online shopping, it will be important for grocers to remain competitive in their offerings. Products such as meat, fresh produce, and meals-to-order will help shield traditional retailers from the CPG and Amazon competition.
As the “new normal” flushes itself out, one thing is certain, technology-focused retailers will be positioned to compete better and adapt more quickly, no matter where the normal ends up.
Interested in taking a deeper dive into the numbers and hear more about the trends impacting the industry?
The industry impact goes far beyond this blog. Request time to speak with me to take a more in-depth look at the industry over the last several months.
About the Author
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.