Opinion: Grocery in the year of Covid: the 6 key trends that we will bring into 2021
2020 has just ended and it’s time to analyze the consequences of the Covid 19 pandemic in primary consumer goods sold in retail. While the focus here is on Italy, many similar lessons have played out across European markets.
The year produced a historic result for sales, but it has also unhinged pre-existing structures and balances, accelerating current trends in purchasing behaviour.
The pandemic has affected the sector in a number of ways:
1. The size and composition of consumer baskets
2. Purchase channels
3. Price management
4. Competitive structures
5. The offer on the shelves
6. The renewal of the offer
1. Changes in the size and composition of consumer baskets
2020 saw two periods of strong sales acceleration.
The first occurred at the beginning of the health emergency, with the surge in demand aimed at increasing stocks of essential products and to cater for the need to consume meals at home to replace restaurant consumption.
Following the ease of restrictions, during the so-called «phase 2», sales increases slowed down, a trend which continued throughout the summer.
The second period of strong (but less dramatic) sales acceleration took place
from the beginning of October, with the emergence of the second wave
of the epidemic.
2. Changing purchasing channels chosen by consumers
Strict restrictions during the first lockdown had marked a significant shift to neighbourhood stores, especially the superettes and small supermarkets. Following the relaxation of restrictions there was a marked acceleration of the discount sector, especially in the second half of 2020, coinciding with the worsening economic hardship felt by families. This trend was amplified over the course of the year.
3. Ups and downs in price management
The increase in average prices in the first wave of the pandemic was driven almost totally by the lack of promotions. Price levels reduced once availability was restored, and became more competitive still as the discounters grew in importance over the year.
4. Competitive structures are changing
Another strong trend theme in 2020 was the development of private label.
Own label products gained share compared to 2019, a trend which has continued, while their increased strength also undoubtedly had an impact on the price positioning of brands who sought greater distinctiveness on shelf.
5. Rationalized shelf offer
Range assortments have also reduced, affecting both own label and brand owner strategies as they fight for space on shelf.
6. Lack of innovation
The number of new launches decreased significantly in 2020 as limited shelf space makes it
increasingly difficult to introduce innovation. But those who did manage to launch new products performed significantly higher than the previous year.
Key future issues to be faced by all those operating in the world of
Grocery will be:
1. Weak deflation in a context of growing economic difficulty for consumers
2. The success of the discount channel
3. The strategies of retailers weaponising their private label capability
4. A return of the promotional activity seeking to redefine its role within the overall marketing mix
5. Range rationalisations in modern distribution
6. The need to relaunch innovation
7. The great opportunity represented by online shopping
Sauro Musiani,
MD Green Seed Italy