Consumer insights company Bigeye’s podcast examines grocery shopping habits during COVID-19 and forecasts which new behaviors might ‘stick’ post-pandemic.
IN CLEAR FOCUS: Bigeye’s Senior Strategist, Dana Cassell, joins the podcast to examine how grocery shopping has changed during the pandemic. We discuss significant changes in consumer behavior – who is shopping, where, how often, and how much is being spent today compared to before COVID-19. We consider how the rapid adoption of online shopping, curbside pickup, and delivery may influence direct-to-consumer models and the long-term implications for CPG brands and the food service industry.
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Adrian Tennant: You’re listening to IN CLEAR FOCUS, fresh perspectives on the business of advertising produced weekly by Bigeye. Hello, I’m your host, Adrian Tennant VP of Insights at Bigeye. An audience-focused creative-driven, full-service advertising agency, we’re based in Orlando, Florida, but serve clients across the United States and beyond. Thank you for joining us. Preliminary estimates published by the Bureau of Economic Analysis show that real GDP declined by a historic 33% at an annualized rate in the three months ended June 30th, totally eclipsing the previous negative record set in the first quarter of 1958. The reasons for this decline are of course, attributable to COVID-19. In March of this year, President Trump declared the spread of the novel coronavirus a national emergency. The lockdowns and stay in place orders that followed had an immediate and devastating impact on the economy. In its most recent weekly Pulse report, the US Census Bureau found that over half of American adults live in households which have experienced a loss in employment income. Forty percent had delayed getting medical care in the previous four weeks. And one quarter of respondents reported feeling down more than half the days or nearly every day in the previous week. FMI, the Food Industry Association, recently published a report looking at grocery shopping trends during the pandemic. FMI’s Executive Director, David Fikes wrote that quote – “Never before in the recent past of our nation have we been forced to confront the magnitude of abrupt changes that COVID-19 circumstances foisted upon us all. So the food industry suddenly found itself facing unprecedented disruption” end quote. To discuss the extent to which the arrival of the coronavirus in the United States has really upended Americans’ grocery shopping habits, I’m joined today by Dana Cassell, Bigeye’s Senior Strategist. Welcome back to IN CLEAR FOCUS. Dana!
Dana Cassell: Thanks, Adrian. I’m glad to be back!
Adrian Tennant: Dana, the report from FMI is one of many published recently that’s tracking changes in consumer behavior and attitudes throughout the course of the pandemic. What are some of the key takeaways for you?
Dana Cassell: Yeah, this report is a great one and I, as a digital marketer, was very enthusiastic to dig in and see how online behavior has changed. And we’re certainly going to talk a lot about that today. But one of the takeaways for me is kind of something that had a little bit more personally, just how the data even acknowledges the pain and suffering and grief that’s going on. Certainly across the world in this report, we’re talking about our country and there’s really no way to make that light. So even as a digital marketer, being excited about what’s happening online and how this pandemic has forced the hand of so many businesses to move quickly with respect to technology. Hunger, specifically childhood hunger, are causes near to my heart. So, there is a lot of disruption in the numbers that are reported in this report from FMI about food availability and income and how that all relates to families and their eating. So all of that is certainly heartbreaking. The report highlights that 20% of shoppers are concerned about having enough money to pay for needed food. And more broadly, 50% of shoppers are somewhat or very concerned about having enough food for their household. And the report also talks about people being worried, just general concern. Seventy-eight percent are choosing a store because of sanitation practices and their efforts to minimize shoppers or offering special hours. So people are worried about getting sick about items being out of stock and rising prices. So certainly, the report talked about some of these things that are more emotional issues. And that was a key takeaway from me outside of those financial and emotional concerns. Of course, the first takeaway from the report is acknowledging how lockdowns and social distancing measures have forced consumers to try new ways of shopping. So that means we’ve seen a rise in eating at home, um, but much less eating out at restaurants, QSRs, and bars. And, in reaction to that, we’ve seen QSRs offering at-home delivery and some even becoming pop-up shops, delivering grocery items, alongside meals. So we’ve seen a lot of innovation and perhaps because I’m trying to find some silver lining in the data, I was also interested in the way the pandemic has forced people to try new things. So the FMI data shows that 20% of Americans have tried online shopping for the first time in the pandemic. Forty-one percent of shoppers are cooking more of their own meals and shoppers are allowing employees to pick out fresh foods for them in ways that they didn’t before. So I was really interested in the ways the report is pointing to how the pandemic is helping us try new things or things for the first time.
Adrian Tennant: Well, we’ll dive into those. But first let’s just remind ourselves of the timeline so far. The CARES Act passed in late March provided economic impact payments of up to $1,200 per adult and $500 per child under 17 years old or up to $3,400 for a family of four. Data from the US Census Bureau’s weekly household Pulse survey shows the stimulus payments were used to pay for a wide range of things, but 59 percent said they used or plan to use their stimulus payment for food. In fact, the most recent Pulse report shows that US households are spending an average of $211.34 a week to buy food at supermarkets, grocery stores, and online, to prepare and eat meals at home. So as the number of Americans on full or partial lockdown increased in line with infections during March, we saw the restaurant trade was one of the worst hit sectors. Data from online restaurant reservation service OpenTable showed that most establishments in major cities like Boston, Chicago, Houston, Los Angeles, New York, and San Francisco had lost 100% of their business by March 17th, with many switching to take out or providing delivery services, really in a bid to remain afloat. Dana, how has the crisis changed households’ grocery shopping habits?
Dana Cassell: FMI has been tracking us grocery shopping, perceptions and behaviors via weekly online surveys since March 21st of this year, the report that we’re referencing was published in June, but of course the reopening of the country is at different stages, depending on where you live in the United States. The FMI report shows that as a result of the coronavirus crisis, almost four-fifths – 78% – of shoppers surveyed indicated they have made a change in where they shop for food. Forty percent reported shopping at fewer stores with 28% shopping online more. Fifteen percent say they avoid the stores they typically shopped pre-pandemic, 11% changed the store they shop at most often. Ten percent shop at different types of stores. And another 10% stopped going to stores altogether. It’s worth noting that during the period in which the data for the FMI study was collected, consumers were multi-sourcing. Their focus was on stocking up on essentials. Supply chain issues and shortages also meant trying new products and brands. In addition to changing where they shop, Americans have also changed how they shop. Nearly nine and 10 respondents – that’s 89% – say they now shop differently because of COVID-19. Changes include 44% spending more money each visit, 32% speeding up their shopping trips, and a
Adrian Tennant: I was interested to see that who makes the grocery shopping trip is different for many households now, too. Among the changes almost one quarter – 24% – said just one person now shops for groceries versus two or more people previously. Eleven percent reported that someone outside the household, such as a relative or friend, makes the shopping trip. And 3% said that a different person entirely in the household now does the food shopping. So what we’re seeing is that even though there are two people in the household who have opinions and shopping preferences, there’s now only one opportunity to go to the store. Do you think this has likely led to list building collaborations in households where it may not have been as routine prior to COVID-19?
Dana Cassell: Sure. We see that more people are planning their meals, which means that they’re shopping on a mission. And also that 11% of shoppers have someone else doing their shopping, so a list would be important in those scenarios. One thing that the report also highlights is the extent to which respondents are preparing or cooking their own meals. Forty-one percent of respondents said that they are cooking more now than prior to the pandemic. Twenty-seven percent report planning more meals in advance. So there is probably better planning because of a more limited budget or wanting to minimize the number of trips to the grocery. Also, we have more people just at home. So there would be more meals happening at home with more people in the house. That means there’s also fewer meals like in cafeterias or in office buildings, fewer drive throughs on the way to do sports practices, things like this. So we’re seeing more at home, more planning in advance, which certainly would lead itself to more list-building. We also see one fifth – 20% – trying new dishes more often. So I love the idea that this might have implications for people trying more exotic foods or flavors in the future. We’ve seen a rise in live classes online and on-demand content from cooking and baking shows. I have actually been super delighted that people have been inspired to branch out. And I hope some of the new dishes people are trying is bringing a little bit of fun and excitement back into our lives through the kitchen. I remember at the beginning of the crisis, there was a lot of talk about people adding quarantine pounds. In the UK, around 48% of people surveyed said they had gained weight during lockdown. So what was really interesting to see that 36% of our US respondents report developing healthier eating habits as a consequence of the COVID-19 pandemic compared to just 13% who say they’re eating less healthily now. Not in the FMI report, but something we’ve seen – whether as a consequence of supply chain issues resulting in shortages of meat products or this trend towards healthier eating – is an increased interest in plant-based alternatives to meat. Impossible Foods’ beef alternative has just been introduced to Walmart stores. Grocery demand for fresh or frozen plant based meat surged 300% in March, while store sales of Impossible Burger – the ones you can get at Burger King – have more than doubled every month since April. The meat alternative market seems to be experiencing what Impossible’s CFO characterized as “hypergrowth”.
Adrian Tennant: Okay. Well, moving away from the FMI report, let’s turn our attention to another area of hypergrowth – e-commerce. To put this in context: since 2009, e-commerce has been growing by around 1.5% each year. Last year, we were looking at around 16% of all retail being conducted via digital channels. But after the point at which COVID-19 was declared a national emergency, e-commerce sales penetration rose 11%, leaping to 27% of all retail. That’s effectively a decade of e-commerce growth achieved in about 10 weeks. Reflecting the shift to purchasing essential goods via digital channels, eMarketer forecasts that food and beverage will be the fastest growing e-commerce category of 2020 with year-over-year growth of 58%. So the number of us consumers purchasing grocery items online in 2020 will surge to 131 million, representing about 53% of all internet users. Dana, does this feel like a real tipping point to you?
Dana Cassell: Yes, absolutely. The data shows that millions of first time grocery e-commerce buyers surmounted the initial adoption hurdle, while many light online grocery purchasers increased the frequency and or value of their orders. And we are seeing that across generations. So there’s not just one specific age group of shoppers that are turning online. And when you see the numbers plotted on a graph, the growth of e-commerce is a classic hockey stick. So I think it’s really exciting. I think it’s definitely a tipping point. And the fact that it’s a decade worth of change in just more than two months is astounding. I looked back at the numbers to see how far we’ve come. A year ago in August of 2019, sales were $1.2 billion in March. That number had grown to $4 billion. That’s a 233% increase and sales grew by an additional 80% from March to June. I think that really underlines how much of the e-commerce growth can be attributed to the fact that consumers have wanted to limit their potential for exposure to the virus, which means that some companies have, you know, really benefited from COVID-19.
Adrian Tennant: For delivery, Amazon and Instacart have been the biggest beneficiaries of the rapid shift to online grocery buying. Quartz estimated a year-over-year increase in Amazon Fresh orders of 323%. The previously troubled meal kit company, Blue Apron, posted much better than they expected earnings for the second quarter, citing increased demand for its meal kits due to the stay at home orders during the coronavirus. Like Amazon, Blue Apron expanded capacity at its fulfillment centers to be able to meet increased demand. For stocking up on supplies, Costco was a key player during the early days of the panic-induced buying period, and could continue to benefit as it sees more of its customers transition to online ordering. For curbside pickups, Walmart was really able to ride the wave because it had focused on growing its capabilities in this area. In fact, the last time you and I spoke about the grocery wars this was one of our topics. Target initially had some catching up to do, but has since made fresh and frozen groceries available for curbside pickup. And as consumers shifted to ordering delivery for dinner, DoorDash’s sales surged: the food delivery service grabbed 45% of third party delivery orders in April, followed by rivals Uber Eats at 28%, Grubhub, at 17%, and Postmates at 7%. Dana, did these stats ring true for how the Cassell household has been operating during the pandemic?
Dana Cassell: Oh, absolutely. We’ve definitely seen some changes in the way we shop in the Cassell household. We’ve been doing curbside pickup of frozen and packaged foods, household supplies, cleaning products for a long time, but this pandemic caused us to start including our fresh foods and those orders. Um, in fact, it also has changed where I did curbside because I’m pickier about where my fresh foods come from than where my paper towels or bag of rice and cereal comes from. So we joined those numbers from the FMI report of consumers who are more willing now to let a store employee pick out fresh fruit, fruits, or veggies or meats than we were six months ago. I’ve also loved experimenting with different stores and their curbside offering. We have, as you mentioned, seen a lot of changes at Target and the way that they’re delivering, they’re also doing a wonderful job at Target using their app to predict when people will come, and being prepared with their orders curbside. So their turnaround time, and a lot of their stores, is very quick from arrival to departure. I’ve also done a little experimenting at Michael’s craft stores to see how their curbside has been operating. I’ve got little girls in my house. So, especially in the early days of pandemic, when we were under stay-at-home orders, we did a lot of crafting. So it’s been really interesting to see how stores across industries have handled curbside. I have a little bit of a casual, lighthearted annoyance at some time slot options, because I was in this habit of doing curbside pick up. And all of a sudden it’s kinda like the gym in January. You know, there’s all these new people in the gym in January, and during the pandemic, there’s all these new folks at curbside! And obviously in the big picture, I’m glad they’re there. I think they’re making a smart choice for themselves and for community health, but it has been interesting to have to have a little bit more competition for some of those time slots. The other thing I’ve really enjoyed watching – and that’s been different for us – I’ve been watching how the DTC brands have changed. So food delivery, kind of like Daily Harvest, even things like skincare subscriptions, we’ve seen similar growth for those DTC subscriptions as we have in the curbside grocery world.
Adrian Tennant: And now, remind me, Dana, do you receive a subscription service for your pets?
Dana Cassell: I do. So I have Tona, who is an almost two-year-old black lab, and Baxter is a 12-year-old Tabby cat, and we get their food by subscription: one through Chewy, one through an Amazon subscribe and save. And then Chewy also delivers like our flea and tick and heartworm medications. You too, right, with the cats?
Adrian Tennant: I’ve just switched to a new service for cats. So I’ll let you know the next time we do a podcast, how that works out. Apparently there’s a money-back guarantee. So if the cats don’t like the food, there’s no problem. We’re going to see how this works out.
Dana Cassell: Okay. Will you survey them on like a Likert scale or how will you get there?
Adrian Tennant: I’ll have to come up with a research methodology to truly capture their cat-titudes!
Dana Cassell: I look forward to participating in that study with you.
Adrian Tennant: Thank you. So what are some of the most interesting things you’ve seen during the coronavirus?
Dana Cassell: Yeah, so the pop-up provisioners, or pop-up grocers made significant inroads with consumers at the beginning of the pandemic offering grocery items iIn addition to their regular menu items. Restaurants were leveraging their frictionless platforms to offer curbside pickup, take out, drive-through, and delivery. For example, Jimmy John’s offered just the bread if customers wanted it. So I’ve really enjoyed watching that creativity happen. And also consumers learn to shift to thinking about a restaurant as a grocery provider as well. I’m always having my eye on the way that small business is working. So I was not particularly surprised to see large national food brands shift quickly, but I really enjoyed watching some of the more boutique, artisan level restaurants, sort of farm-to-table places make a shift. And I loved watching that. I saw one community food hub, which is kind of the idea of a food hall, but in a drive-through way really kind of live out the rising tide floats all boats model. So a large restaurant in the area became a grocery provider alongside food kits, meal kits, and takeout. And then they also brought in other smaller businesses, so like a local honey company. There was a distillery that turned to hand sanitizer. Some restaurants that were not able to support their own online platform, created meal kits. There were florists from local farms, there were farm fresh produce offerings. So this large restaurant that could have really just focused on their own products and turning their own store into the restaurant, into a grocery, brought in all these other smaller or less technologically savvy businesses in the area for a hub. And that is really one of my favorite things that I watched happen. I also saw a local wine company shift really, really quickly to online sales doing curbside pickup and also delivery, which, you know, there’s kind of a joke in that with figuring out how to get wine during a pandemic, but I really admired the way they did it. They – instead of trying to take their entire inventory online – pretty quickly built like an “Our Picks” section. So you kind of answered a couple of questions about what your favorite varieties were, and then they gave you like our top eight picks. And they were in a few different price ranges, so they weren’t just pushing people to high end wine and it made their website shoppable very quickly. And then over time, they’ve added volume and I got to speak with the owner, just out of curiosity. And it seems like these months during coronavirus, where they’ve had to shift to curbside and delivery have been some of their best that they’ve been in business yet. So that’s a great small business success story. Also, this is kind of less of a shift and more of a surge in food trucks coming and really promoting more than they have in the past. So I’ve seen a steady flow of food trucks at neighborhood pools or community venues that are offering not just their typical fare, but also like for instance, a local baker – usually just selling scones and loaves of bread – has been offering bacon home pizza. So they’ve prepared it and you go finish it in your oven at home. They had yeast and flour during the huge baking surge of March and April when those were really hard to find at grocery stores. And then they also made some of their typical products that they par-baked that then you finished in your oven at home like scones. So I was really encouraged to see some of those food truck owners being really creative and also meeting the needs of the people they were serving. The last thing that I really have seen that I thought was great innovation, are restaurants offering family style offerings on their menus. So a great example is a Mexican street food company that we really love. We actually pre-pandemic ate there quite often. And they have started doing taco kits for a family. So it’s all prepared and ready, but rather than ordering four different entrees or two entrees and two kids’ meals, they’ve just made these family style offerings. So that has kind of changed Taco Tuesday at our house. And I think what I’m really kind of the summary of what I’m saying, the most interesting things I’ve seen is that these brands are, first of all, they’re being altruistic, the rising tides thing. They’re also adding levity. They’re trying to help us have a little bit more fun they’re finding us yeast, so we can try this sourdough trend, or they’re giving us flowers in a time when we haven’t really thought to buy flowers or some interesting different ways to enjoy food at home. And I’ve loved how businesses have shifted to be able to do that.
Adrian Tennant Now, although people will likely return to supermarkets if online grocery settles at even around 20% in the US, it will still represent one of the largest consumer markets in the world. At three quarters of a trillion dollars, the industry could see $100 to $150 billion transition to tertiary channels, creating extraordinary disruption – but of course, also opportunities. For example, in cold storage, fulfillment and packaging. As we’ve learned over the past few months, some types of packaging are better suited than others when it comes to digital fulfillment. Dana, do you think that could fuel innovation? Not only in grocery, but in CPGs that were previously tentative about adopting a direct-to-consumer strategy?
Dana Cassell: If it doesn’t then I don’t know what their strategy is. There is this idea of asking ourselves when things go back to normal, what from before is worth going back to, and I think brands need to ask themselves that too, right down to how their products best serve consumer preferences now, which are significantly different than what they were six months ago. So I think about the way that some products appear in app. So if you are an Instacart shopper, or if you use your grocery app to do curbside or any form of grocery delivery, you know that not all product images and descriptions are equal. So some brands have just done a bad job of providing the right content and that creates confusion when you’re shopping. So I really do think that we’re going to see grocers and CPGs focusing more on the quality of the work that they put into the direct-to-consumer strategy.
Adrian Tennant: Looking forward to a post-pandemic world, or at least in a world where we have an effective vaccine and have developed herd immunity, the big question of course is how many of these new consumer behaviors will remain habitual?
Dana Cassell: It’s a great question. The FMI report we referred to earlier found that seven out of eight adults – 88% – expect some persistent changes to their food habits once the pandemic becomes less of a concern and almost half – 48% – of Americans expect to prepare meals at home more frequently. And with significant implications for food service, 38% of consumers expect to eat out less while these percentages are averages reflecting all generations FMI reported that habitual changes were especially true for younger adults.
Adrian Tennant: Yeah. I think what the FMI report and others show is that the majority of Americans expect some of their COVID-19 shopping habits to continue to some degree, once the pandemic becomes less of a concern. For example, a Harvard Business School report published this week suggests that at least 16% of American workers will switch from office based settings to working home at least two days per week after COVID-19 subsides. This obviously has significant implications. And I know I’m biased, but – as people’s post-pandemic lifestyles emerge along with new online preferences, dietary habits, arising from some broader changes that we’ve been seeing such as an increased focus on health and wellness and an intention to cook at home – more often research that yields consumer insights will be key to stay in close to people’s evolving behaviors and attitudes. Right?
Dana Cassell: Absolutely. And I look forward to really digging into that post-pandemic research phase of life.
Adrian Tennant: Dana, it’s always fun having you on the podcast. Thank you very much for being our guest on, IN CLEAR FOCUS.
Dana Cassell: Thanks so much for having me. Stay well.
Adrian Tennant: My thanks to our guest this week, Bigeye’s Senior Strategist, Dana Cassell. You can find a transcript of our conversation along with links to resources on the IN CLEAR FOCUS page at bigeyeagency.com under “Insights.” Just click on the button marked “Podcast.” That’s also where you’ll find our listener survey. Please take a moment to share your thoughts about your podcast preferences and the type of content you’d like to hear more of. To ensure you don’t miss an episode, please consider subscribing to the show on Apple Podcasts, Spotify, Google Podcasts, or your favorite podcast player. And if you have an Amazon Echo device, you can use the IN CLEAR FOCUS skill to add the podcast to your Flash Briefing. Thank you for listening to IN CLEAR FOCUS. I’ve been your host, Adrian Tennant. Until next time, goodbye.
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Adrian Tennant: Welcome back. We’re talking with Bigeye’s Senior Strategist, Dana Cassell, about changes to shopping habits during the COVID-19 pandemic.
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