IRI and FMI: What can past crises teach us about grocery shopping behavior during the coronavirus pandemic?

"We’ve actually seen a lot of this behavior before (albeit not on the same scale),"​ Joan Driggs, Vice President, Thought Leadership, IRI said during a joint FMI and IRI webinar​​ held this week. 

The broadest trend is an ongoing shift towards cost-conscious grocery shopping, she said. 

"Cost is valued more than convenience. Already consumers are reporting having difficulty affording needed groceries. The people that are already struggling are struggling even more and we’re just kind of getting into this." ​​

The Federal Reserve predicts that 47 million Americans will be unemployed by the end of April and anticipates that 2.6 million job loss claims could be filed this week.

According to a survey by IRI, the number of respondents concerned about COVID-19 has reached 94% (up from 83% a week prior).

"And already, a lot of retailers have different price tiers and these make great options for consumers looking to spend a little less money. And also gauge what kind of premium level they want to spend up to,"​ noted Driggs.

As a result, IRI expects to see a strong, ongoing shift from mainstream to value brands and private label items.   

"We might see a shift to smaller, lower-priced packs with demand from lower income consumers and from manufacturers downsizing to improve margins."​

Learning from Hurricane Harvey and Hurricane Irma

"We do think there are some isolated crises like Hurricane Harvey and Hurricane Irma that we can actually learn from."​

Both hurricanes hit hard in 2017 in Florida and Texas driving spikes in staple pantry items and less essential, indulgent products. However, once hard-hit populations emerged from the crises, demand for certain items dropped significantly, said Driggs.

"The demand drop is going to differ from product to product,"​ Driggs said, explaining that items like canned soup, canned meat, and items most closely associated with meal prep are likely to experience a downturn in sales as consumers associate those items with "bad times."​

"People will probably want to shake off the routines they adopted to get through ​[the crisis]," ​she said.

Whereas treat-like, indulgent, and snack items have an opportunity for sustained growth post COVID-19 as consumers are likely to associate these products with more positive feelings of providing indulgence during hard times, she added.

Lesser-known brands have a unique opportunity

"An interesting finding from that hurricane data is that lower priced or lower penetration brands actually have an opportunity to gain new customers at times like this. We have consumers that are faced with out of stocks – that’s pretty prevalent right now – so they might be willing to try a new product just to fill the void. And if they like it they'll keep coming back," ​she said. 

"There’s an opportunity to be relevant, be on trend, and entice trial among those shoppers who are looking for the best deal,"​ said Driggs, who added that retailers can benefit by shuffling their displays around to feature less prominent brands that may have been overshadowed by bigger, brand names.

Stockpiling behavior is also contributing to new consumer trial, as consumers are increasingly willing to trade down to brands that they ultimately may stick with in the long term once the global crisis of COVID-19 comes to an end, according to Driggs.

"We do see that COVID-19 is bringing in some new buyers and not just for hand sanitizers and spray disinfectant. If you look at the leap in refrigerated meat substitutes, they’re up nearly 30%,"​ said Driggs.

Driggs suggested that smaller brands may want to invest in increased marketing and trade efforts to reach more consumers who are on the lookout for replacements to their favorite brands and products. She added that families with young kids at home are among the most likely to pick up a new brand or try an unfamiliar brand during these times.

"Nothing like a crisis to get people to test the waters of a category going through an innovation boom."​

Relieving anxiety through indulgence shopping

While many consumers want to make sure they have a stocked pantry with staples such as beans, rice, and pasta, they are taking an opportunity to indulge with items such as packaged cookies, desserts, and gourmet coffee to recreate social consumption occasions that were previously only available by dining out. 

"You have to remember that we have been a population that’s spent half of its food dollar away from home and now with so many limited options, we’re spending so much more of that food dollar in home. Just think of the amount of gourmet coffee that they aren’t getting out of home right now​,"​ said Driggs.

"Just as we learned from the past recession there is still room for comfort. Sales of treats, snacks, and alcohol are really being purchased in greater quantities."​

Stockpiling, an end in sight?

"Stock up behavior is going to continue for the next few weeks driving outside growth in large format including grocery, mass, and club, and this really has an opportunity that will probably be sustained for a while,"​ Driggs said.

However, she said, IRI is seeing early indications that consumers are easing up on their stockpiling behavior and shifting from buying enough groceries and necessary items to get them through one week vs. two weeks.

"We do see that in the past week there were 54% of respondents buying groceries for two weeks and that’s kind of come down. So the two week stockup has ticked down 4% and the one week stock up has ticked up 4%,"​ she said.

E-commerce, temporary solution or the new norm?

There has been a greater shift to online shopping as consumers avoid going into physical stores to pick up their groceries. IRI foresees that this behavior is not only temporary and a method to get through a crisis, but will have a positive long-term impact on the online grocery industry. 

According to recent data from Brick Meets Click/ShopperKit, 31% of US households report using an online grocery pickup service during the past month, an an increased from 13% of US households who said they shop online in August 2019. More than a quarter (26%) of online grocery shoppers surveyed said that they’re using a specific online grocery service for the first time. 

"If this goes well, I think this is really one of those behaviors that’s going to stick with us post COVID-19 and even as the economy recovers," ​added Driggs.