FMI 2020 Trends Report: A Pandemic Curveball Changes Industry Trajectory

The coronavirus pandemic accelerated some retail shopping trends while completely upending others, according to FMI’s U.S. Grocery Shopper Trends 2020 report conducted by the Hartman Group. The research had been concluded in February 2020 before the pandemic struck, but the association went back to assess how the sudden pandemic shifted the outlook for retailers.

“In less time than it takes for a seasonal holiday promotion to come and go, the microscopic novel coronavirus behind today’s deadly pandemic has already prompted a generation’s worth of macro-level change, upending food life in every community across America. Long-term trends now must be seen in the context of the current moment rather than vice versa,” study authors noted.

Retail food saw eight years of spending growth condensed into one month at the outset of the pandemic. For decades, retail saw the foodservice sector slowly growing its share of food dollar until foodservice spending eclipsed retail food spending in 2018.

In March, however, that trend snapped back suddenly when restaurants were forced to close their doors due to stay-at-home mandates. In March, monthly revenue at food retail jumped by more than 25% compared to February and as of April, it has remained more than 10% higher than pre-pandemic levels, while food retail’s share of food spending jumped from 50% in February to 63% in March—levels not seen since March 1995. April’s 68% food-at-home share dates back even further, the study said. 

Whether shopping patterns remain at these levels will be influenced by how safe consumers feel returning to restaurants as they gradually reopen and how much discretionary income they have during the current recession as well as if retailers can step into the restaurant’s void with their own product offerings, the study maintained.

The pandemic also quickly compressed years worth of online spending growth into a very short period of time. Younger consumers like millennials had embraced online grocery shopping much more readily than older consumers; however, those reporting doing at least some of their weekly grocery shopping online nearly doubled in one month. In February, 14.5% of consumers shopped online for at least a portion of their groceries (up from 10.5% in 2019), but that number had skyrocketed to 27.9% just a month later. One-fifth of consumers were using e-commerce for grocery for the first time during the early moths of the pandemic, with many reporting using specific order methods such as curbside pickup for the first time as well. The stickiness of these numbers are hard to predict as American consumers tend to like to shop for groceries in-store, the survey authors note.

Another big change that may have lasting results is the amount of cooking being done at home as the spontaneity of foodservice has largely been eliminated due to the closure of dining rooms and the need to schedule pickup orders. In March and April 2020, 40% of consumers noted they are cooking more of their meals, with more than a quarter planning meals in advance and 20% trying new dishes more often. Gen Xers and millennials new-found confidence in cooking combined with budget constraints may provide a lasting trend that will benefit grocers, especially as fresh categories and lightly prepped ingredients gain new interest.