Grocery’s New Normal

The coronavirus pandemic is impacting the grocery industry in unprecedented ways. With consumers panic buying and hoarding grocery items, manufacturers have had to shift to meet demand. And as social distancing measures were put into place, consumers turned to online grocery or decided to shop in-store, but only once every few weeks and building much bigger baskets per trip. 

How much has grocery grown due to the coronavirus outbreak?

Data from our network of 100M unique users shows that the average growth in online grocery order rate among top-shopped ingredients grew by 122.85% during the first few weeks of the coronavirus pandemic response. 

However, key shelf-stable ingredients such as pasta (+698.99%), canned crushed tomatoes (+316.42%) and evaporated milk (+287.07%) exceeded that benchmark in droves. Consumers leaned into purchasing shelf-stable ingredients at rates of about three to seven times that of other grocery items, indulging in “hoarding” behavior as they sought out ways to decrease the number of shopping trips necessary for as long as possible and practice social distancing.

And IRI, a market research firm, found extreme growth in nearly every CPG category in mid-March as shutdown orders and COVID-19 were spreading. However, their data also shows that panic buying has slowed down, with mid-March marking the peak of panic buying behavior.  

While recipe engagement is skyrocketing (with views outpacing those during Thanksgiving), online order rates are not progressing at the same rate. Shoppers are getting more accustomed to their “new normal” and are hunkering down, brainstorming creative new ways to utilize all the goods acquired in stocking-up shopping trips from early on in the pandemic, to delay future shopping trips, both in-store and online.

So, what’s next for grocery?

While it’s true that grocery is experiencing a surge, there’s no doubt that a recession is looming, and with it will come a slew of rapidly changing consumer shopping habits that will affect both grocery retailers and CPGs in ways that will parallel those seen in the 2008 recession.

Over 30 million Americans already filed jobless claims as of April 30. With social distancing measures forcing most non-essential businesses to close, that number is expected to increase, and will cause more consumers to be more price-sensitive. Combined with fully stocked pantries from weeks of hoarding, the biggest challenge for brands will be to break those shopping habits and find ways to encourage consumers to use the products in their pantries in order to initiate  future buying.

First, brands will need to shift to providing creative use cases for their products. This will remain true as shoppers stay at home and seek to cook through their pantries, but also once restrictions are lifted. Hoarding tendencies will be long-lasting among consumers who have developed reactionary habits during a fearful time. 

Second, couponing and price-sensitive shopping will surge among consumers, who will be much more price sensitive amid a recession. With “stock up” mentalities lingering, trade promotions will bring consumers to the store, but also will move product off shelves in higher volume.

Finally, managing inventory will continue to be a challenge and marketers will need to responsibly target consumers who are in areas where products are available. This will be further complicated by shoppers turning to online shopping as a channel to which they’ve become accustomed. Prior to the coronavirus pandemic, online grocery was only 3% or 4% of grocery spend. That number has now increased fivefold. It remains to be seen, however, how many of the millions of new online grocery users generated due to COVID-19 will continue to use online grocery as their primary shopping channel.

The next few months will mark a major turning point for grocery, and we’ll continue to keep an eye on how behaviors are changing in order to try and prepare for what’s to come.

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