If you're suffering from new coronavirus fatigue and craving normalcy, don't go shopping for relief at your supermarket anytime soon.
The grocery industry isn't talking about normal for the rest of 2020. It's talking about the "new normal" and what lies beyond.
Chances are shoppers can expect months more of seeing store employees wearing masks and gloves – and store signs urging shoppers to follow suit.
But industry officials believe the pandemic crisis and shopping frenzy are beginning to settle into a busy new grind as America tries to reopen the economy.
The "new normal" that's unfolding includes:
A big shift to e-commerce.
Continued occasional shortages for meat and produce items (though toilet paper is predicted to become reliably restocked on shelves by the end of summer).
Higher prices as supermarkets continue to pick up the slack of feeding Americans amid wide restaurant shutdowns.
What lies beyond depends on whether consumers or their finances ultimately change during the pandemic and once it ends. Industry officials wonder if Americans might keep cooking more at home. They also don't know how much a worsening economy will change consumer needs.
"There is much we still do not know. How long will it last? How many lives will be lost or irreversibly changed? What will be the economic impact?," confided Kroger CEO Rodney McMullen to shareholders of the nation's largest supermarket chain in a May 12 letter.Digital groceries explode with pandemic
Fear of exposure to the virus has driven legions of customers online in a bid to avoid crowds and cut their potential risk.
In just a few weeks, the pandemic crisis has advanced the digital sale of groceries by years, food industry officials say.
Before the coronavirus, about 3% of U.S. grocery sales were ordered for curbside pickup or at-home delivery, industry officials said. In recent weeks, 20-25% of groceries sold began with a click on a mobile phone or computer.
"The pandemic has done in the last five, six weeks for e-commerce what we didn't expect to happen for five years," said Doug Baker, vice president of industry relations for FMI, an Arlington, Virginia-based trade group.
With so many customers feeling compelled to try buying their groceries online, industry officials believe many shoppers will grow comfortable with the service and continue to use it.
On May 19, Arkansas-superstore giant Walmart reported its e-commerce sales jumped 74% in the U.S. during its first quarter ending April 30.
Seattle-based Costco reported earlier this month its e-commerce sales nearly doubled in April from the same month in 2019. Other grocery players have said sales are up, but have not quantified.
Digital juggernaut, Seattle-based Amazon, doesn't break out its grocery sales at Prime Now, Amazon Fresh and subsidiary Whole Foods. But it disclosed last month it has nearly doubled its pickup capacity to more than 150 Whole Foods stores.
Cincinnati-based Kroger, has said digital orders were up "substantially," but haven't said how much they contributed to an overall 30% sales surge in March, when customers dashed to stock up pantries and refrigerators. McMullen, however, disclosed at an April investor forum that many of the employees Kroger has recently hired are helping the company beef up digitally-ordered groceries.
"If you look at the people we've hired, a lot of those people... support our pickup business," McMullen said. "The growth there has been substantial... in terms of both pickup and delivery.”
With the online surge, shoppers are beginning to notice more parking spaces at Walmart, Kroger and other retailers dedicated to serving customers for pickup services. Walmart is also pushing its delivery business, expanding an express two-hour service to more than 1,000 stores in May. Also,KrogerandAmazon's Whole Foods are beginning to convert a handful of locations into "dark stores" that don't admit customers but focus entirely on pickup-only service.Shortages ahead for meat, not toilet paper
First, there was panic. Then there was panic-buying and hoarding. And now, there are disruptions too.
What's so darned difficult about keeping enough toilet paper stocked so there are no shortages at stores? That's the question that dogged many retailers in the first weeks of the crisis.
The short answer is two-fold.
First, after many companies encouraged employees to work from home, a lot more demand was heaped onto supermarkets and other retailers. But second, an unprecedented wave of stockpiling overwhelmed the readily replenished shelves at stores.
Kroger CEO McMullen told investors in April toilet paper was selling out of stores every day by 12 noon or even 10 a.m. He added it was a shock for the supply chain to try to serve a customer that had quickly decided to quadruple the home supply. He alluded to a comic strip that depicted a grandparent decades from now finally reporting their stockpile was used up.
"I have no idea how much toilet paper people have in their houses," McMullen marveled. "We don't know what the demand really is... we're ordering twice what we used to – and we're selling twice what we used to."
Still, some industry analysts believe the hoarding will come to an end after consumers realize they have more than enough on hand – and storing it all begins to crowd their homes.
"It's not a production issue – it's a stockpiling issue. People are buying way more than they need," said Bob Hoyler, a senior research analyst at Euromonitor International in Chicago. He predicted shelves would begin to remain stocked by late summer.
Not that shortages of other products won't continue to crop up.
Experts say meat and produce items will continue to see interruptions based on health concerns at American processing plants.
William Masters, a food economist at the Friedman School’s Department of Food and Nutrition Policy at Tufts University, said meat processing plants are more vulnerable to coronavirus outbreaks because the industry is more labor-intensive. Packaged goods factories or commercial bakeries are more automated and have fewer workers in proximity to one another.
"There may be shortages because processing plants are forced to close or shut down," Masters said, noting the produce section could also see interruptions due to labor issues as farms grapple with tougher safety measures or outbreaks among workers.Price hikes, sour economy weigh on shoppers
A tidal wave of customers sweeping into stores with a limited number of products to sell, prompting shortages of key items could also set the table for rising food prices. Experts say it's a classic case of rebalancing of supply and demand.
Earlier this month, federal officials reported the Consumer Price Index in April notched its largest one-month price increase for groceries in nearly 50 years. Overall grocery prices jumped 2.6% in just 30 days, more than five times the 0.5% inflation rate recorded in February and March.
In April, inflation for the combined index for meats, poultry, fish and eggs rose even faster, up 4.3%; cereals, bakery products and non-alcoholic beverages also jumped 2.9%; dairy products, fruits and vegetables rose 1.5%.
Going forward, grocery prices will be caught in a tug of war between high demand and shortages pushing prices up and consumer jitters over a deteriorating economy and soaring job losses that will drag prices downward.
How much has business picked up at supermarkets?
Prior to the pandemic, supermarkets accounted for roughly 50% of U.S. food sales measured in dollars. After restaurants had to limit service to take-out only or closed their doors completely in recent weeks, Masters estimates food retailers are commanding 85% of food dollars spent.
With so much demand and so many more shopping trips, Masters said supermarkets have a little more pricing power. Since they don't need sales and promotions to draw customers into stores or online, some retailers have cut back on deals.
Nonetheless, Masters said the grocery sector remains highly competitive, which will keep prices from rising dramatically.
Beyond the competitive landscape, another unpleasant reality will keep prices in check: Customers out of work or worried about their jobs will cut back as a nasty recession begins to take hold of the country.
The U.S. economy shrank 4.8% during the first quarter of 2020 and the national unemployment rate soared to 14.7% in April as millions of Americans lost their jobs amid shutdowns to slow the spread of the coronavirus.
McMullen told Kroger investors in April his company has continued putting out weekly promotions to reassure customers beginning to worry about the economy.
"I was talking to a couple of customers ... they were telling me that they were surprised that we still have yellow (promotional sales) tags in the store and they were appreciative of it," he said.Future fallout in flux
Industry officials aren't sure how broader uncertainty over the economy and efforts to "reopen" the rest of the economy will affect consumers and how they shop.
There is concern that if the economy turns sour, shoppers will cut back. Part of such a shift would include consumers continuing to cook more meals at home to save money. But it could also prompt shoppers to trade down from premium products. (Arrivederci, $6 a jar Cucina Antica pasta sauce. Howdy, Hunt's – and your $1.50 can.)
Thriftier customers could also drive more sales toward retailers' private label store brands.
Beyond economic reasons, observers are also wondering if consumers decide to keep cooking more meals at home after weeks of preparing three squares a day for themselves.
If consumers keep cooking at home higher than pre-crisis levels, it could permanently shift spending at supermarkets – and restaurants.
"People might have become more comfortable cooking at home," said Simon Gunzburg, a research analyst at Euromonitor International (and Hoyler's colleague) in Chicago. "Whether they actually like it remains to be seen. That could have a lasting impact."
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