So far, everyone I have read about seems to be doing well. Acosta has said that their data shows that the Grocery channel has gained a little share and Mass/Club has lost a little. Long term, I have heard some analysts say they think Amazon, Walmart and Dollar General will pull away from others. The US could go into a bad recession. Low price retailers will appeal to consumers hit the hardest. We have already heard of the consumer going back down the value chain in pet food, moving from a super-premium to a grocery brand, which did not happen in the crisis of 2008. Walmart has a national footprint and leverage with suppliers to position its business for future growth. Private Labels could also get a boost. Not all retailers are as developed in Private Label as Walmart and Target. That too could have an impact on those retailers’ long-term potential.
An Acosta shopper survey released this week said 53% of shoppers are shopping less but buying more on each trip. Bulk and higher count items are in higher demand. This means grocery stores may have to change their assortment in the future with higher demand for “club style packaging”. Three to four years ago, some suppliers would not sell “club packaging” to grocery retailers, due to lower margin and the fear of keeping the consumer away from the store for longer.
One big question remains: will consumers want to go back to stores for ‘experiences’ once social distancing is rescinded? Do they want to browse the aisles of Costco, Trader Joe’s or Mariano’s to sample foods and drinks? This could impact some retailers and more niche/experiential brands and how they will deal with sampling and new product launches. Acosta said, after discussions with their retailers, that they are not likely to open salad bars and self-service counters anytime soon. Prepared meals will be popular. This is especially important for younger shoppers who have tended to eat out more than older shoppers.
What about promotions? At this time many retailers have essentially stopped promoting. Acosta said prices have risen for the consumer because of a lack of promotional pricing. Retailers told Acosta that they think there will be promotions in the latter half of the year.
At what point does a brand that switched its manufacturing line over from foodservice to retailer need to switch back? And will there be the same demand from foodservice as before the pandemic? If it does come back, how soon and to what extent? These are the questions the c-suite within our supplier clients are wrestling with as it impacts how they structure their business and which “channels” they need to serve.