ALEXANDRIA, Va.—Americans are not stopping their stockpiling habits created by the pandemic any time soon, reports the Wall Street Journal. With many people moving from small city apartments to spacious suburban dwellings, they have more room to store food and other essentials, plus the rise in inflation is leading many consumers to buy in bulk to save money.
Wholesale retailers like Costco and Sam’s Club have seen sales and dollar increases, with bulk stores rising 26.6% in dollars and 18% in volume during the fourth quarter of 2021 compared with the same quarter of 2019, according to IRI. The increase is substantially more than other retail channels.
IRI finds that the average annual growth in sales by volume of food and beverages was 3% in 2020 and 2021, compared with just 0.5% average annual growth for the prior 10 years, according to the Journal.
“Consumers who experienced the harsh reality of pandemic shortages made permanent changes,” Bob Nolan, senior vice president of demand science at Conagra Brands Inc., told the Journal “They didn’t just stock up that week, but they said to themselves, even if subconsciously, ‘That’s not going to happen to me again.’”
Sam’s Club reported record membership in the third quarter of 2021, and most of the members have been young millennial families, which has led Sam’s to change the products it offers, expand its mobile-app technology and offer curbside pickup for online orders. The retailer led focus groups which found that their customers want higher quality goods, including healthier ingredients and clearer labeling.
It is human nature to accumulate extra supplies during times of uncertainty, Ayelet Fishbach, professor of behavioral science and marketing at University of Chicago Booth School of Business, told the Journal. “Psychologically, the cost of underconsumption appears higher than overconsumption,” she says. “We are more upset about not getting our cereal box than having an extra box left over and having to throw it away.”
Breakfast food demand is up as not as many people are buying breakfast out of the home on their way to work or school, reports the Journal. Sam’s Club asked a New Jersey bakery to amp up production of its breakfast Danishes, as it said it needed to “aggressively increase” its inventory. The bakery took the portion of its supplies intended for restaurants, casinos and cruise ships and put its toward products for retail, but it still needed to scale up.
Conagra has increased production of certain foods and added a new production line at its factory in Arkansas to meet consumer demand. The company thought that it would have a drop in demand because people bought so much at first, “but the reality is [consumers] have established a new inventory level,” said Nolan. Kraft Heinz is also installing a new production line for its macaroni and cheese cups that will result in a “significant increase in capacity” by the end of the first quarter of this year.
One woman the Journal interviewed said that she buys four boxes of pancake mix when she sees them and recently ordered 40 yogurt pouches for her kids. She says she wants to have “a month or two of supplies on hand.” She is eating more at home now than she was pre-pandemic, and she doesn’t want to be in a predicament of not having food when products aren’t on shelves.
The convenience channel benefited from consumers snapping up larger sizes of consumer packaged goods, beverages and household items like paper towels and toilet paper during the first year of the pandemic, NACS State of the Industry data for 2020 show. And that behavior appears to be lingering. In the salty snacks category, for example, industry watchers are seeing continued demand for larger package sizes in c-stores.
As NACS Magazine shares in the February 2022 issue, Stefanie Nobly, consumer and market intelligence manager at General Mills Convenience, marketer of the Chex Mix and Gardetto’s brands, said take-home packages are expected to drive some of the future growth for the salty snacks category. High’s convenience stores, for instance, even tweaked its planogram to accommodate big bags from the likes of Frito-Lay and Utz, noted Mike Jackson, category manager at High’s, which has more than 50 locations in the mid-Atlantic. The chain also added the On the Border line of salty snacks, which is known for its take-home packs, he said.
How did 2021 stack up against a pandemic-centric 2020 in terms of category performance in convenience retailing? Find out at the NACS State of the Industry Summit, April 12-14, at the Hyatt Regency O’Hare, Chicago, Rosemont, Illinois. See the full agenda and register today. Then look for the June 2022 issue of NACS Magazine for complete and exclusive coverage of the SOI Summit.