GROCERY RETAIL TO LEAD RESTAURANTS IN US FOOD MARKET SHARE POST-PANDEMIC

Grocery retailers will have the edge in food spending market share over the foodservice sector as the United States heads into the post-pandemic period, according to FMI-The Food Industry Association’s annual US Grocery Shopper Trends study.

At the same time, within grocery retail, mass merchants have been absorbing share from traditional supermarkets, revealed FMI’s report, prepared in tandem with The Hartman Group.

The food-at-home market share fell from over 60% in 1992 to under 50% around 2014-15, while food-away-from-home share climbed from less than 40% to over 50% in that time frame. That trend continued until February/March 2020, when the onset of the pandemic began to flip-flop market share in favour of food retail.

Monthly revenue for food retail hit its peak in April 2020, surging 27% to represent 70% of all monthly food spending, whereas share for foodservice plunged to 30%. The relaxing of Covid cases and pandemic restrictions in the following months helped the restaurant sector restart businesses and win back share, but through March 2021 its monthly revenue remained 17% below earlier levels, FMI reported.

Leslie Sarasin, President and Chief Executive of FMI, noted the “suddenness” of the food market share shift toward grocery retailers from foodservice.

Sarasin said: “Within three weeks, 30 years of gains and losses were erased. Restaurants have bounced back some by adjusting their business practices, finding innovative ways to serve their customers and having limited reopenings. But there remains a 12% gap in food retail’s favour.”

That 12% gap as of March 2021 would translate into €82.5 billion of growth for grocery retailers if stretched over the full year, FMI’s study projected.

Sarasin said: “The extent to which this elevated food retail spending continues depends much on the actions of those in the business of producing and selling food to retain customer loyalty beyond the pandemic.”

According to FMI’s tracker, average weekly grocery spending per household jumped from €100 through February 2020 to €133 in late March/early April 2020, moderating to around €111 over the ensuing weeks before rising to €120 in the first week of October. FMI estimates weekly household spending for groceries at €117 through February 2021, compared with €100 in 2020 and €93 in 2019.

“That’s a dramatic rise, €117 per week on average, which would be between 15% and 20% higher than pre-pandemic,” said David Feit, Vice President of Strategic Insight at The Hartman Group.

“So that’s where all the sector-level sales receipts are coming from. Whether that goes up, stays flat or goes back down depends on what will go on with shoppers, what stayed the same for them and what has more fundamentally changed.”

Post-pandemic, many Americans will look to grocery stores as Covid-shaped eating and food spending behaviours continue. 

FMI’s study found that 58% of more than 2,000 consumers polled said they eat at home more since the pandemic, and 49% cook or prepare their own meals more often. Similarly, 46% keep more food on hand stored at home, 38% spend more money on groceries, with 34% shopping for food online more often.

Sarasin said: “Retailers must compete with foodservice on the playing fields of convenience, ease of ethnic options, affordability and culinary experience.

“Many consumers have learned during the pandemic that home-prepared meals are not only healthier and more economical, but they can actually be quicker, too. Retailers have a chance to deepen that experience but should be seeking ways to amplify convenience, nutrition and ease.”

FMI said these efforts will come amid a grocery shopper shift away from supermarkets and toward the mass channel.

Steve Markenson, Director of Research and Insights at FMI, said: “Channel usage has definitely evolved over the past year as channels other than supermarkets have gained regular shoppers,” 

In early 2021, 39% of US food shoppers surveyed cited supermarkets as their primary store, down from 44% in 2020. Meanwhile, 33% named mass merchants as their primary grocery store, up from 26% in 2020. 

Also gaining favour as a primary grocery destination were warehouse clubs (from 7% in 2020 to 8% in 2021) and online-focused retailers (from 4% in 2020 to 6% in 2021).

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