COVID-19 - Changing Shape of the Demand Curve - IRI...2018/03/06 · Total U.S. - Club 103 106 127...

June 18, 2020

PART 3 ̶ THE CHANGING SHAPE OF THE CPG DEMAND CURVE

COVID-19 and Navigating the Path Ahead

Tracking Transformation of the Retail Landscape

Read Other CPG Demand Curve-Focused Reports: Part 1 - Shopper Engagement, E-Commerce, CPG Demand & Beauty

Part 2 - Meat and Millennials’ Impact on CPG Demand Curve

https://www.iriworldwide.com/IRI/media/Library/IRI-COVID-19-Impact-Assessment-4-24-2020.pdf/

https://www.iriworldwide.com/IRI/media/Library/COVID-19-Impact-Assessment-Millennials-Meat-5-15-20.pdf

© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 2

HOW CAN IRI HELP?

THE TRANSFORMING CPG LANDSCAPE

• E-commerce, Dollar and Grocery are the big gainers in sales and traffic

• Shoppers’ trips and shopping patterns have rebounded recently; average spend per trip is up double digits

• Edible aisles have driven sales growth in Grocery and Mass channels, where increased traffic is also leading to strong sales for nonedible aisles; assortments have fallen across aisles and channels

• Increased demand is benefiting smaller manufacturers more as they pick up distribution

• E-commerce is playing a bigger role in Nonedible, especially Healthcare, Cosmetics, Personal Care, Baby and Pet

• Convenience sales recovered in May as states begin to reopen

Executive Summary

The ripple effects of COVID-19 will

change the CPG demand curve for

many years. With changing consumer

behavior come new demands on CPG

retail, including where consumers shop

and how they engage with retailers.

As states eased restrictions, retail

sales rebounded by ~18% in May (vs.

April); also consumers benefited from

federal stimulus checks and increased

unemployment benefits. In this report,

we provide our perspectives to help

manufacturers and retailers meet

altered – and transforming – demand.

• Shopper Retention Strategy

• CPG-Retail Collaboration Strategy

• Channel Strategy

• Revenue Growth Management

• Assortment Optimization

• IRI eMarket Insights

LOOKING AHEAD

• Expect measured channels’ CPG sales to remain elevated through 2021, driven by lingering stay-at-home behaviors as out-of-home activity returns, but to decline in 2021 vs. 2020; expect 2020-21 growth to be higher than prior years, with more sales in e-commerce

• Grocery growth should continue to outpace other channels in 2020 as consumers continue to make large, edible-focused trips

• Convenience will rebound as the economy reopens, but weak income growth will limit sales growth

• Retailers will continue to invest in digital and delivery solutions; physical stores will adjust to accommodate social distancing and communicate safety to customers and employees. Retailers will evolve to make shopping convenient and emphasize overall value



COVID-19 Pandemic Impacted the World,

Including Changes in Eating, Home and Personal Care

The U.S. food dollar shifted almost entirely to the home

with stay-at-home directives.

COVID-19 triggered heightened attention to

personal and home care.

Spring and Summer holidays and celebrations are being re-calibrated as small, at-home –

sometimes virtual – events.At-home occasions will continue to

dominate in 2020 as COVID-19 impact is joined by recession.


Consumer Behavior Accelerates

Retail Transformation

• Consumers are more comfortable with

omnichannel experiences

• As online adoption accelerates, consumers

are comparing prices more rigorously

• Assortments need to balance supply chain

efficiencies versus shoppers’ increased

craving for variety and convenience

• With demand surge, retailers need to evolve

own brands to meet new demand spaces

• Online search needs to catch up with

consumer demands

COVID-19

Forces

Long-Lasting

In-Store Impact

Plexiglass

Contactless

Payments

Curbside

Pickup


Online and Food and Beverages Stores Are the Bright

Spots in U.S. Retail; Foodservice Recovering in May

U.S. Retail Sales $B by Store Type, February - May 2020

Greater increases in spend for younger

generations (Millennials, Gen Z)

vs. Boomers in early reopened states2

Pent-up demand for cars, furniture, apparel, etc.

Online sales continue to rise despite store

reopenings

Foodservice is at 60% of February level

and accounts for 35% of food retail sales vs. 50% in February

Source: U.S. Census Retail Trade advanced estimates seasonally adjusted. IRI Consulting analysis.1. Includes Auto, Gas, Furniture, Building Materials, Clothing, Electronics, and Sporting retailers. 2. JP Morgan Chase Consumer Card Spending Tracker.

69

(12%)

228

(45%)

73

(14%)

30 (5%)

30 (7%)

269

(48%)

46 (9%)

65

(13%)

72

(14%)

32 (6%)

March

71

(16%)

39 (8%)

56 (13%)

79

(18%)

82

(16%)

176

(40%)

Food Service & Drinking Places

April

60

(12%)

27 (6%)86

(17%)

27 (5%)Health & Personal

Care Stores

May

Gen Merch Retailers

F&B Stores

All Other Retail1

$557 B

$516 B

$439 B

64

(12%)

219

(43%)

February

65

(12%)

60

(11%)

$513 B

Non-Store Retailers (e.g., Online)

-7%

-15%+17% May vs.

Feb. Index

85

90

125

99

59

113


CY

2019

Jan +

FebMar Apr May

CY

2019

Jan +

FebMar Apr May

CY

2019

Jan +

FebMar Apr May

3.6% 2.3% 2.3% 3.4% 4.7%2.6% 2.5% 5.0% 9.8% 9.6%2.8% 2.4% 3.1% 6.3% 6.8%

-1.7% -1.0% 22.5% 0.0% 0.7%-0.1% -0.5% 30.2% 8.8% 7.6%-0.4% -0.6% 28.4% 6.8% 6.0%

At-Home Edible Sales Continue to Grow in Double-Digits

Along With Accelerating Price / Mix Across CPG

U.S. CPG Retail Sales Growth in Measured Channels (MULO+C)

Volume1 Sales %

Change vs. YA

2.3 1.7

32.4

13.6 13.3

2.5 2.3 1.7 4.0 4.9

-0.6

30.2

9.3 8.0

-0.2

2.6 2.0

36.6

19.5 17.9

1.8 1.7 1.1 3.6 4.6

0.8 0.3

35.1

15.4 12.7

1.8 1.4

25.3

3.4 5.4

3.7 3.4 2.9 4.7 5.3

-1.8 -2.0

21.8

-1.3

0.1

1. Dollar-weighted average change across categories. Source: IRI POS data Total U.S. MULO+C ending 5/31/20.

Dollar Sales %

Change vs. YA

Price / Vol1 %

Change vs. YA

Price / Unit %

Change vs. YA

Unit Sales %

Change vs. YA

Total Store – 2020 Edible – 2020 Nonedible – 2020


E-Commerce 133 125 156 175 178

Consumers Are Back in May; Shift to Larger Pantry-Stock Trips

Continues; Online, Dollar and Grocery Channels Are the Winners

IRI CPG Demand Index: Total Store

$

4 WE 1/26/20 4 WE 2/23/20 4 WE 3/22/20 4 WE 4/19/20 4 WE 5/17/20

Tri

ps

Total U.S. - All Outlets 101 104 124 95 101

Total U.S. - GroceryX 100 104 132 102 104

Total U.S. - Drug 96 94 111 80 81

Total U.S. - MassX 88 94 113 73 79

Total U.S. - Club 103 106 127 94 103

Total U.S. - Dollar 105 106 138 100 106

Total U.S. - Walmart Total 102 106 115 86 90

$ p

er

Tri

p

Total U.S. - All Outlets 100 99 109 122 121

Total U.S. - GroceryX 99 98 109 125 123

Total U.S. - Drug 104 106 112 114 116

Total U.S. - MassX 104 93 112 117 111

Total U.S. - Club 97 98 106 120 118

Total U.S. - Dollar 100 101 117 127 124

Total U.S. - Walmart Total 99 99 110 121 122

Source: IRI Consumer Network Panel, IRI eMarketing Insights data ending 5/17/20.


Daily Shopping Patterns Have Mostly Reverted to Pre-COVID-19 Trends

Source: IRI Daily Chain POS data ending 5/31/20.

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

M Tu W Th F Sa Su

February

M Tu W Th F Sa Su

March

M Tu W Th F Sa Su

April

M Tu W Th F Sa Su

May

Total Store Average Dollar Sales Distribution by Day of Week

During early stay-at-home weeks, shoppers changed weekend routines and did more brick-

and-mortar shopping mid-week. As states reopen, shopping has shifted back to weekends.


ChannelCY 2019

Sales ($B)

Dollar Sales

2016-2018 CAGR

Dollar Sales % Change vs. YA

CY 2019 January+February March April May

Grocery $320.4

Mass $230.3

Drug $47.8

All Other $77.2

MULO $675.7

Convenience $161.0

MULO+C $836.8

22.0%

10.9%

-4.1%

11.7%

15.2%

5.6%

13.3%

Grocery CPG Sales Growth Accelerated Post-COVID-19,

While Convenience and Drug Lagged

Dollar Sales Trends in Measured Channels / Total Store

0.9%

3.3%

-1.4%

0.7%

1.5%

2.5%

1.7%

1.7

1.6%

3.8%

-0.5%

0.5%

2.1%

3.3%

2.3%

2.3

1.0%

3.2%

-0.2%

-0.2%

1.5%

2.8%

1.7%

1.7

29.0%

7.8%

-9.2%

13.5%

17.1%

-1.1%

13.6%

13.6 13.3

Source: IRI POS data ending 5/31/20.

51.2%

28.7%

22.4%

39.8%

40.1%

-0.4%

32.4%

32.4


2% 10% 35% 74%

2% 11% 29% 141%

2% 19% 22% 92%

2% - 32% -

4% 14% Not Reported Not Reported

2% 14% 43% 42%

Not Reported 8% Not Reported Not Reported

3% - Not Reported Not Reported

2% - Not Reported Not Reported

8% 8% 28% 66%

1% 12% 33% 40%

Retailers Across Channels Had Significant Sales Gains Over the Recent

Quarter, With Particular Growth Coming from Their Digital Platforms

Pre-COVID-19 vs. COVID-19 Quarterly Earnings – Multiple Retailers

Retailer

Same Store Sales Digital Sales

Recent Quarter

End DatePre-COVID-19

Quarter

Recent Quarter

(COVID-19)

Pre-COVID-19

Quarter

Recent Quarter

(COVID-19)

Mass 5/1

5/1

Gro

cery

5/23

2/29

3/28

3/29

Dru

g

3/31

2/29

2/29

Clu

b 5/10

5/1

Source: Most Recent Quarterly Earnings Reports, Multiple Retailers.

“-” Indicates Retailers Where Most Recently

Reported Quarter is Pre-COVID-19


E-Commerce Accounts for the Greatest Change in Share Due

to Nonedible Purchase Shifts; Grocery Is the Winner for Edible

$ Share by Channel: Before, During, After Stockpiling Peak

TOTAL STORE TOTAL EDIBLE TOTAL NONEDIBLE

31.2 33.7 32.8

22.121.6 20.2

14.2 11.7 13.3

12.7 12.2 15.6

8.9 9.48.4

4.7 4.6

4.3 4.5

PeakPre-Peak Post-Peak

3.71.9 2.3 2.2

3.8

44.6 46.8 46.1

21.4 20.6 19.5

12.3 10.0 11.2

6.4 6.1 7.7

8.7 9.6 8.7

1.7

Pre-Peak

3.12.0

Peak Post-Peak

1.63.33.4

1.81.6 1.8

12.5 14.9 12.6

22.822.8

21.0

16.7 13.916.1

21.4 21.0 27.5

9.3 9.38.0

8.3 8.56.8

6.5 6.4 4.9

Post-PeakPeakPre-Peak

3.22.5 3.0

-0.5

+0.3

-1.0

-0.5

+2.9

-0.9

-1.9

+1.6

Share Chg. Post vs. Pre

+0.2

+0.2

-0.4

0.0

+1.3

-1.1

-1.9

+1.5

-1.6

+0.5

-1.5

-1.3

+6.1

-0.6

-1.8

+0.1

Source: IRI POS, Panel, and E-Market Insights Data. Pre-Peak 8 weeks ending 2/23, Peak = 4 weeks ending 3/22, Post-Peak 8 weeks ending 5/17.Note: Top All Other retailers include Specialty Stores, Liquor, Pet, and Military. E-Commerce sales are collected via 204 tracked categories, with share scaled up to match coverage of total store.

ALL

OTHER

DOLLAR

DRUG

CLUB

E-COMM

CONV

MASS

GROCERY




Baby Food & Care -$14 (-4%) -$22 (-3%) $0 (0%) -$7 (-10%) -$6 (-5% -$48 (-4%)

Cosmetics -$4 (-8%) -$11 (-4%) $0 (-17%) -$27 (-13%) $1 (3%) -$41 (-7%)

General Merchandise $170 (23%) $287 (16%) $13 (5%) $12 (9%) $75 (13%) $557 (16%)

Home Care $100 (18%) $156 (18%) $2 (16%) $16 (20%) $78 (17%) $353 (18%)

OTC Healthcare -$1 (0%) $1 (0%) -$21 (-16%) -$95 (-8%) -$2 (-1%) -$118 (-3%)

Paper Products $112 (24%) $37 (8%) $3 (43%) $5 (9%) $18 (6%) $175 (14%)

Personal Care $83 (12%) $90 (5%) $7 (24%) -$5 (-1%) $28 (8%) $204 (5%)

Pet Food & Care $11 (2%) -$4 (0%) $0 (1%) $1 (4%) -$1 (0%) $7 (0%)

Total Nonedible $458 (12%) $534 (7%) $5 (1%) -$100 (-4%) $192 (8%) $1,089 (5%)

Alcohol $606 (32%) $124 (24%) $482 (26%) $27 (14%) $39 (25%) $1,278 (28%)

Beverages $446 (16%) $164 (11%) -$5 (0%) -$19 (-8%) $69 (9%) $654 (8%)

Dairy $677 (24%) $168 (16%) -$1 (-1%) -$1 (-3%) $72 (22%) $915 (22%)

Fresh Foods $1,865 (15%) $263 (7%) -$51 (-10%) -$10 (-18%) $117 (12%) $2,185 (12%)

Frozen Foods $874 (34%) $303 (24%) $8 (4%) $9 (23%) $153 (30%) $1,348 (30%)

Packaged Food (excl. Snacks & Candy) $1,334 (30%) $352 (17%) -$5 (-3%) $5 (7%) $162 (25%) $1,848 (25%)

Snacks & Candy $233 (12%) $85 (7%) -$71 (-5%) -$31 (-10%) $49 (5%) $265 (5%)

Total Edible $6,037 (21%) $1,458 (13%) $357 (5%) -$19 (-2%) $660 (17%) $8,493 (18%)

Grocery Mass Conv Drug All Other Total MULO+C

ED

IBL

EN

ON

ED

IBL

EEdible Aisles Have Driven Sales Growth in Grocery and Mass, Where

Increased Traffic Is Also Leading to Strong Sales for Nonedible Aisles

Aisle $ Growth by Channel Absolute Dollar ($M) Change vs. YA (% Change vs. YA – May 2020 vs. YA)

Source: IRI POS Data ending May 31, 2020. IRI Analysis.


Baby Food & Care -16 (-3%) -96 (-6%) 1 (14%) -13 (-7%)

Cosmetics -45 (-10%) -196 (-7%) 0 (-22%) -167 (-16%)

General Merchandise 35 (3%) -387 (-7%) 0 (0%) -21 (-5%)

Home Care -88 (-9%) -92 (-5%) 0 (-2%) -3 (-1%)

OTC Healthcare -75 (-5%) -195 (-6%) -8 (-11%) -188 (-9%)

Paper Products -43 (-32%) -56 (-33%) -1 (-21%) -24 (-39%)

Personal Care -32 (-1%) -138 (-2%) -2 (-8%) -87 (-3%)

Pet Food & Care 0 (0%) -72 (-4%) 0 (-5%) 0 (0%)

Total Nonedible -263 (-4%) -1232 (-6%) -11 (-6%) -503 (-8%)

Alcohol 24 (2%) 50 (8%) 12 (6%) 13 (5%)

Beverages -1 (0%) 18 (1%) 4 (1%) 4 (1%)

Dairy -17 (-2%) -43 (-5%) -1 (-6%) -2 (-6%)

Fresh Foods -142 (-5%) -295 (-10%) -6 (-5%) -8 (-9%)

Frozen Foods -90 (-4%) -238 (-13%) 0 (0%) 2 (2%)

Packaged Food (excl. Snacks & Candy) -218 (-4%) -478 (-8%) -4 (-3%) 0 (0%)

Snacks & Candy -49 (-3%) -89 (-4%) -35 (-6%) -72 (-6%)

Total Edible -494 (-3%) -1074 (-6%) -30 (-2%) -63 (-3%)

Grocery Mass Conv DrugE

DIB

LE

NO

NE

DIB

LE

As Retailers Reduce Space and Many Manufacturers Streamline Products

to Ensure Inventory, Assortment Has Fallen Across Aisles and Channels

Assortment Changes by Channel / Average Items per Store Selling

Chg. vs. YA, % Items Chg. vs. YA – May 2020 vs. YA

General

Merchandise has

been the primary

shelf space gainer

in Grocery, with

categories

typically

purchased

elsewhere like

candles,

kitchenware and

lawncare

increasing most.

Items Change vs. YA (% Change vs. YA)

High margin

category valuable

to increase space

Items per Store

selling counts the

average number

of unique SKUs

that have sold per

store in May;

Driven by Out of

Stocks and

rationalization of

items in response

to high demand

Source: IRI POS Data ending May 31, 2020. IRI Analysis.


Increased Demand Is Benefiting Smaller

Manufacturers More as They Pick Up Distribution

% Share of Total Store Sales by CPG Manufacturer Size /

Total U.S. Measured Channels (MULO+C)

47.1 46.7 46.4 45.5

16.0 16.0 15.9 16.1

12.6 12.6 12.7 13.2

8.6 8.6 8.3 9.2

15.6 16.1 16.7 16.0

Large

2020 Post-Peak2019 2020 Pre-Peak 2020 Peak

Medium

Small

Extra Small

Private Label +0.3

+0.1

+0.1

+0.1

-0.7

+0.3

+0.1

+0.1

-0.1

-0.4

+1.1

-0.2

+0.1

-0.1

-0.9

vs. YA vs. YA vs. YA vs. YA

+0.7

+0.5

+0.7

+0.1

-2.0

Smaller Manufacturers Are Gaining Distribution and Velocity as Larger

Manufacturers Face Supply Constraints

and/or Focus on Core Lines in Face

of High Demand

Large Manufacturers Are Growing Through

Velocity With a Slight Decline in

Distribution Points

Greater Growth for Small and Medium

Manufacturers in Edible Than Nonedible

Source: IRI POS Data MULO+C. IRI Consulting Analysis.

Note: Large is $5.5B+ in L52W, Medium $1-5.5B, Small $100M-1B and Extra Small <$100M. Pre-Peak 8 WE 2/23/20, Peak 4 WE 3/22/20, Post-Peak 8 WE 5/17/20.


Across Channels, Price Inflation Peaked in Early April With Grocery

Having the Largest Increase Since the Beginning of the Year…

IRI CPG Inflation Tracker – Typical Pantry Stocking Baskets of Three Generations

Index of Generation Cohort Basket vs. WE 1/5/20

0

105

100

110

115

MULO

0

105

100

110

115

Grocery

Millennials

Boomers

Families

100

0

105

110

115

Mass

1/5 2/2 3/1 3/29 4/26 5/24 1/5 2/2 3/1 3/29 4/26 5/24 1/5 2/2 3/1 3/29 4/26 5/24

Source: IRI POS data ending 05/31/20. / Typical grocery baskets for various cohort types is a mix of Produce, Refrigerated Foods, Snacks, Frozen Food, Dairy, Meat, and Pantry items.


…while Stores – Especially Grocery – Have Reduced Price Promotions

Weekly % of Dollar Sales on Price Reduction Promotion / Current and Ppt. Change vs. YA

26.7

23.5

18.519.3

MarJan-Feb Apr May

+0.3 -3.1 -9.1 -8.2

Ppt. Change vs. YA

8.77.3 6.6

5.6

AprJan-Feb Mar May

25.624.5 24.5

23.0

Jan-Feb Mar Apr May

+0.1 -0.6 -2.4 -3.7 -1.0 0.0 -1.0 -0.9

Grocery Mass Drug

Source: IRI POS Data. IRI Consulting Analysis, Data Ending May 17, 2020.

Ppt. Change vs. YAPpt. Change vs. YA


E-Commerce Is Playing a Bigger Role in Nonedible, Especially

Healthcare, Cosmetics, Personal Care, Baby and Pet

E-Commerce Share of Omnichannel – Monthly View / Monthly Ending 5/31/20

118

30

59

3911

8

28

48

310

1411

39

511

4

12129

38

510

4

11

Fresh Foods DairyPackaged FoodBeverage Frozen Foods Baby Food + Care Snacks + Candy

+1+1

+8

0+2

0

+3

4136

28

12

39

26

17

47

35

27

11

40

24

15

56

44

31

13

46

36

21

50

42

31

14

45

36

20

Pet Food + Care Home CareGeneral Merchandise OTC HealthcareCosmetics Personal Care Paper Products

+9

+6

+3

+2

+6

+10

+3

EDIBLE

NONEDIBLE

Source: IRI eMarket Insights, based on 204 releasable eMarket Insights categories. Share based on available categories vs. MULO excluding Convenience and other unmeasured channels.

Jan + Feb

March

April

May


CPG Manufacturers Are Also Increasing D2C Options

E-Commerce Sales Are Significantly Higher Post-COVID-19 for All Retailers;

Amazon, Target and Shared Delivery Services Gained Most vs. Jan + Feb

E-Commerce Dollar Change vs. YA / Monthly Ending 5/31/20, E-Commerce-RMA

34%

90%

60% 47%17%

69%

-11%

38% 45%30%

58%

123% 151%

98%

49%

114%

57% 46%

212%

60%

80%120%

287%

93% 87%

144% 146%

-42%

211%

78%85%

203%

54%

88%115% 103%

-35%

118%

71%

PeapodAmazon TargetWalmart ShiptSam’s Club HEBKroger Costco Total eCom

64%

Share of Total E-Commerce

Jan+Feb 51.7% 13.4% 1.7% 1.6% 1.4% 1.1% 0.9% 0.8% 0.7%

March 49.2% 13.2% 2.4% 1.9% 1.4% 1.1% 1.0% 0.7% 1.3%

April 48.7% 12.3% 3.5% 1.5% 1.5% 1.1% 1.4% 0.2% 1.3%

May 52.9% 10.2% 2.8% 1.6% 1.6% 1.0% 1.3% 0.3% 0.8%

Primary

Fulfillment

Method

Greater Share in May vs. Jan / Feb

Source: IRI eMarket Insights, based on 204 releasable eMarket Insights categories.

Instacart reports order volumes have surged as much as 500%

Jan + Feb

March

April

May


Convenience Sales Dipped in March and April, But

Recovered in May as States Began to Reopen

Retail Sales Growth in Convenience Channel

Volume1 Sales %

Change vs. YA

Dollar Sales %

Change vs. YA

Price / Vol1 %

Change vs. YA

Price / Unit %

Change vs. YA

Unit Sales %

Change vs. YA

Note: CY 2019 WE 12/29/19. Source: IRI POS Data, IRI POS – Convenience. IRI Growth Consulting Analysis.

Total Store – 2020 Edible – 2020 Nonedible – 2020

CY

2019

Jan +

FebMar Apr May

CY

2019

Jan +

FebMar Apr May

CY

2019

Jan +

FebMar Apr May

4.5% 2.4% 3.7% 4.0% 3.0%4.2% 3.7% 8.2% 14.7% 12.5%4.1% 3.0% 8.1% 12.9% 9.8%

-1.7% -0.5% -1.1% -1.6% 2.6%-0.3% 0.0% -10.5% -16.5% -6.3%-0.7% -0.2% -7.9% -12.3% -3.8%

3.3 2.8

-0.4 -1.1

5.6

3.6 3.4 2.7 3.4 3.8

-0.3 -0.6-3.0 -4.4

1.7

3.9 3.7

-3.2 -4.2

5.5

3.2 2.6 1.3 2.54.2

0.7 1.0

-4.4-6.6

1.2

2.8 1.9 2.6 2.45.7

4.1 4.1 4.1 4.4 3.4

-1.3 -2.1 -1.5 -1.9

2.3

Growth driven by alcohol


Reopening Is Improving Trips to Convenience Stores, With Traffic

Shifting to Mid-Day, Afternoons and Evenings vs. Morning and Late Night

-11.1

-22.4-15.8

Total U.S.

+6.5

-9.8

-19.6-13.3

Reopened States

+6.3 YTD’20

L4 Weeks

L12 Weeks

Product Trips % Change vs. YA

Total US

Reopened

states Total US

Reopened

states Total US

Reopened

states Total US

Reopened

states Total US

Reopened

states Total US

Reopened

states

Share of Week PPT

Chg vs. YA -1.0 -0.8 -1.9 -1.9 1.1 0.9 0.9 0.7 1.7 1.5 -0.8 -0.5

-15.8

-26.6 -23.1

-11.7 -12.3-7.6

-23.2

-13.3-22.1 -20.4

-9.8 -10.4-5.1

-18.0

Afternoon (2p-6p)Total Day Morning (6a-10a)Early Morning (2a-6a) Mid Day (10a-2p) Evening (6p-10p) Late Night (10p-2a)

+2.5 +4.5 +2.7 +1.8 +1.9 +2.4 +5.2

Daypart Product Trips % Change vs. YA, Latest 4 WeeksTotal U.S. Convenience

Reopened Convenience States

Source: Major Convenience retailers daypart data for General Food, data ending 6/7/20.


Top Categories in Convenience Accelerated as

Alcoholic Drinks and Ice Cream Drove Edible

Top Growing Categories / % Change vs. YA, CY 2019 – 2020 Ending 5/31/20, Total U.S. – Convenience

CY 2019 Jan + Feb March April May

Category % Chg Category % Chg Category % Chg Category % Chg Category % Chg

Electronic Smoking Devices

71.1% Spirits/Liquor 16.6% Spirits/Liquor 23.5% Ice Cream/Sherbet 42.8% Spirits/Liquor 41.6%

Spirits/Liquor 15.4% Sports Drinks 14.3% Ice Cream/Sherbet 22.8% Spirits/Liquor 39.3% Ice Cream/Sherbet 37.8%

Frozen & Dry Ice 10.0% Frozen & Dry Ice 12.8%Smokeless Tobacco

12.6%Beer/Ale/Alcoholic

Cider21.1%

Beer/Ale/Alcoholic Cider

25.9%

Energy Drinks 9.5%Smokeless Tobacco

9.1% Frozen & Dry Ice 11.7% Cigars 20.1% Cigars 24.1%

Sports Drinks 7.4% Energy Drinks 6.8%Beer/Ale/Alcoholic

Cider9.9% Wine 15.7% Wine 17.4%

Smokeless Tobacco

6.5% Novelties - Fz 5.9% Cigars 5.3%Smokeless Tobacco

9.9%Smokeless Tobacco

10.7%

Salty Snacks 6.0%Non-Chocolate

Candy5.8% Wine 2.2%


0.8% Dried Meat Snacks 9.4%

Dried Meat Snacks 4.9% Bottled Water 5.6% Cigarettes 1.3% Cigarettes 0.7%Non-Chocolate

Candy8.5%

Pastry/Doughnuts 4.6%Beer/Ale/Alcoholic

Cider5.6%


0.3% Milk -2.5% Lighters 5.9%

Wine 4.4%Electronic Smoking

Devices3.9% Milk -3.4% Chocolate Candy -2.9% Chocolate Candy 5.6%

Edible

Nonedible

Alcohol

Note: CY 2019 WE 12/29/19. Source: IRI POS Data, IRI POS – Convenience. IRI Growth Consulting Analysis.


LookingAhead


2.3 2.6

15.1

2.5 1.8

7.3

Expect Measured Channels’ CPG Sales

to Remain Elevated Through 2021, Driven

by Lingering Stay-at-Home Behaviors

CPG $ Sales % Chg. vs. YA Actual & Forecast –

Multi-Outlet (MULO+C)

Assumes no major national quarantine event after March–May 2020 / Source: IRI Strategic Analytics proprietary forecasting models, IRI Growth Consulting analysis.

EDIBLE

NONEDIBLE

~12-14

~9 to 11

2015-2018CAGR

2019

~3 to 5

2020Rest of

Year

2020 YTD

2021

~-4 to -6

~0 to -2

2020Full Year

~4-6

Actual Forecast

Key Factors

Localized containment if the virus spikes again; no national shut down

Fatigued by quarantine, consumers are going out again; out-of-home consumption occasions begin to recover• Retail and recreation mobility improved to -17% vs.

pre-COVID-19 vs. -50% at height of pandemic1

• Restaurant spending improved to -33% vs. ~-70% at peak2

• In-home cooking weariness• Foodservice reshape with more delivery, take-out,

drive-throughs and outdoor eating• Businesses and schools reopen

As economic stimulus and extra unemployment support run out / decrease, value seeking and in-home consumption increases

Work-from-home will be the norm for higher-risk and conscious segments and many white-collar workers (at least a few days / week)

2020-21 Sales Growth (2-Year CAGR)

Exceeds 2019 growth due to elevated in-home consumption

1. Google Mobility Report Total U.S. retail and recreation mobility as of June 12, 2020. 2. JP Morgan Chase Consumer Card Spending as of June 12, 2020.


Grocery Growth Should Continue to

Outpace Other Channels in 2020 as

Consumers Continue Large,

Edible-Centered TripsCPG $ Sales % Chg. vs. YA Actual & Forecast – Grocery

Additional Factors

Continued preference for “one-stop-shop” (larger

Edible baskets and more frequent purchasing of

Nonedibles) to limit exposure when shopping

will benefit Grocery


Exceeds 2019 growth due to elevated in-home

consumption


EDIBLE

NONEDIBLE

1.3 1.7

20.6

1.3 1.2

18.2 ~16-18

~11 to 15

2015-2018CAGR

2019

~6 to 8

2020Rest of

Year

2020 YTD

2021

~-7 to -9

~-4 to -6

2020Full Year

~10-12

Actual Forecast


4.1 3.7

13.4

4.6 3.86.8

Expect More Muted CPG Growth in

Mass Even as Traffic Holds With

Value-Seeking Shoppers Additional Factors

Increasing need for value as stimulus lessens over

time will drive trips to Mass

However, Edible purchases shifting

more to Grocery and Dollar in one-stop-shop pantry stocking habits


Lags 2019 growth dueto likely shifts to Grocery

and Dollar channels

EDIBLE

NONEDIBLE

~9-10~6 to 8

2015-2018CAGR

2019

~4 to 6

2020Rest of

Year

2020 YTD

2021

~-3 to -4~-0.5 to -1.5

2020Full Year

~5-6

Actual Forecast

CPG $ Sales % Chg. vs. YA Actual & Forecast – Mass



3.6 3.9

0.43.5 2.8 2.6

Convenience Is Likely to See Mild

Recovery as Mobility Returns, But

Weak Income May Limit Growth Additional Factors

People driving more starting to increase

demand for gas; also, preference for car travel

vs. air travel post-COVID-19

Construction recovery and increased demand for home improvement

projects will help sales growth

Yet, higher unemployment and lower disposable

income growth will limit Convenience store

traffic and sales

EDIBLE

NONEDIBLE

~1-2~2 to 3

2015-2018CAGR

2019

~2.5 to 3.5

2020Rest of

Year

2020 YTD

20212020Full Year

~2.5-3

Actual Forecast

~3~3.5

CPG $ Sales % Chg. vs. YA Actual & Forecast – Convenience



The Transforming Retail Environment Opens Up Many New Opportunities

• Focused messaging to attract new shoppers, e.g., safety, value, easy

• Replacements for out-of-home activity,e.g., food and beverage entertainment bundles, partnership with restaurants for distribution for new meal experiences, including kits or prepared meals

• Increased general merchandise valued by consumers, e.g., DIY products, kitchen supplies, school supplies, etc.

• Safety: Assurance of personal safety, e.g., spacing, cleanliness, contactless payment

• Value: Assurance of best value, including price-matching

• Convenience: One-stop shopping and easy shopping experience, e.g., flexible delivery methods depending on sense of urgency, curated “discovery” kits for consumers to learn about and sample new products, multiple and personal touchpoints with retailers and brands

Retailer & Manufacturer Opportunities

OPPORTUNITY

Shopper Expectations

EXPECTATIONS

CPG Retail Shopping Experience

Expectations and Opportunities


Retailers Will Continue to Evolve /

Transform to Meet Emerging Shopper Needs

More agile & nimble planning / forecasting

to meet varied needs (e.g., local virus spikes,

plans for key “seasons” such as back-to-

school, fall baking, Thanksgiving)

Source: IRI Analysis.

Smarter in-store SKU rationalization

to meet the variety needs of most valuable

shoppers in a store leveraging loyalty and

POS data

More efficient transportation from

warehouse to store to meet omni-

channel demand

Perfect omnichannel fulfillment

strategies to meet shopper needs

and demand more profitably


With Surge in Online Demand, Winners

Will Overcome Short-Term Challenges

Source: IRI Weekly Surveys among IRI Consumer Network™ Panel representing Total U.S. Primary Grocery Shoppers – 4/24-26; IRI Analysis.

Click & Collect Opportunities

• Staffing and Infrastructure

Prep space, staffing and training expertise to

collect groceries, efficiency in collection

• Delivery Windows

Managing and ensuring inventory and tackling

out-of-stock situations

• Fulfillment

Retailers need to be nimbler vs. pushing

pickup dates to 3-5 days

62%of consumers stated

some items they wanted were not available to

order online

48%stated items ordered were

not delivered due to availability changes

21%couldn't get a delivery

time that was convenient


Winners Will Continue to Invest to Handle Online Demand

• Click & Collect expansions and/or implementation

accelerating

• Adjustments to capabilities and resources for

processing online orders in existing stores

• Enhanced partnerships with delivery companies

• Micro-warehouses within store or marginally

performing stores for fulfillment

• Expanding or adding drive-up areas

• Leveraging loyalty card data to digitally target shoppers

with visibility to localized store inventory in real time

Source: IRI Analysis


Insights and Strategic

Guidance for Better Decisions

IRI’s Online Resources Include Real-Time

Updates and Weekly Reports That Track

the Impact of the Virus on CPG and Retail

The IRI COVID-19 lmpact

Includes COVID-19 impact analyses, dashboards

and the latest thought leadership on supply chain,

consumer behavior, channel shifts for the U.S.

AND international markets

IRI CPG Economic Indicators Including the

IRI CPG Demand Index™, IRI CPG Supply

Index™ and IRI CPG Inflation Tracker™

Accessible through the insights portal

to track the daily impact of COVID-19.

This includes top selling and out-of-stock

categories across the country and

consumer sentiment on social media

https://www.iriworldwide.com/en-US/Insights/Publications/coronavirus-impact-to-CPG-and-retail

https://bit.ly/IRI-COVID-19-Reports

https://advantage.iriworldwide.com/Engineering/covid19/index.html


The Latest COVID-19 Reports and Insights from IRI (click to see full report)

IRI COVID-19 IMPACT ASSESSMENT REPORTS LESSONS FROM THE GREAT RECESSIONTHE CHANGING SHAPE OF THE CPG DEMAND CURVE

https://www.iriworldwide.com/IRI/media/Library/IRI-TL-Recession-Series-Part-3-Brand-Performance-5-21-2020.pdf

https://www.iriworldwide.com/IRI/media/Library/IRI-TL-Recession-Series-Part-2-Maintaining-Pricing-Discipline-5-7-2020.pdf

https://www.iriworldwide.com/IRI/media/Library/IRI-TL-Recession-Series-Part-I-4-29-2020.pdf

https://www.iriworldwide.com/IRI/media/Library/COVID-19_IRI.pdf

https://www.iriworldwide.com/IRI/media/Library/COVID-19-Thought-Leadership.pdf

https://www.iriworldwide.com/IRI/media/Library/COVID-19-Thought-Leadership-3-25-2020.pdf




https://www.iriworldwide.com/IRI/media/Library/IRI-TL-Recession-Series-Part-4-Private-Label-5-28-2020.pdf

https://www.iriworldwide.com/IRI/media/Library/IRI-TL-Recession-Series-Part-5-Building-Brands-6-3-2020.pdf

https://www.iriworldwide.com/IRI/media/Library/IRI-TL-Recession-Series-Part-6-Innovation-Lessons-6-12-2020.pdf

https://www.iriworldwide.com/IRI/media/Library/COVID-19-Impact-Assessment-Millennials-Meat-5-15-20.pdf

https://www.iriworldwide.com/IRI/media/Library/IRI-COVID-19-Impact-Assessment-4-24-2020.pdf/

https://www.iriworldwide.com/IRI/media/Library/COVID-19-Changing-Shape-of-the-Demand-Curve-Part-3-6-18-20.pdf


IRI CPG Demand Index™

The IRI CPG Demand Index™ provides a

standard metric for tracking changes in

spending on consumer packaged goods. It

measures weekly changes in consumer

purchases, by dollar sales, against the year-

ago period across departments including fixed

and random weight products, grocery aisles

and retail formats. The IRI CPG Demand

Index™ is available for eight U.S. regions and

all U.S. states.

CLICK HERE FOR MORE!



The IRI CPG Inflation Tracker™ provides the

well-known price per unit metric for tracking

changes in pricing of consumer packaged

goods. It provides weekly changes in

consumer prices, price per unit against the

year-ago period across departments including

fixed and random weight products, grocery

aisles and retail formats. The IRI CPG

Inflation Tracker™ is available for eight U.S.

regions and all U.S. states.


IRI CPG Inflation Tracker™



The IRI CPG Supply Index™ provides a

standard metric for tracking changes in

product availability (i.e., in-stock rates) in

stores for consumer packaged goods. It

measures weekly changes in product

availability against the baseline across

departments and retail formats. The IRI

CPG Supply Index™ is available for eight

U.S. regions and all U.S. states.


IRI CPG Supply Index™



Want to Be the First to Know?

Registered Users Get New

Thought Leadership from IRI’s

Research, Data & Analytics Experts

www.iriworldwide.com/en-US/Insights/Subscribe

http://www.iriworldwide.com/en-US/Insights/Subscribe

© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 38© 2020 Information Resources Inc. (IRI).

Confidential and Proprietary. 38

CONTACT US FOR MORE

INFORMATION

IRI Global Headquarters

150 North Clinton Street

Chicago, IL 60661-1416

[email protected]

+1 312.726.1221

Follow IRI on Twitter: @IRIworldwide

https://bit.ly/IRI-COVID-19-Reports

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