COVID drove sales through the roof last year, but this year will be different. You’ll need to increase promotion and capitalize on the trend toward more at-home meals to stay healthy.
Don’t drive yourself crazy by comparing this year’s scan data with that from 2020, when the pandemic pushed sales up by ridiculous levels. But let’s take a nostalgic (ha!) look back and ponder what to do about 2021.
52%, 107% & 42%!
Food sales started their acceleration last year during the second week of March. The frozen department skyrocketed by 52%, 107% and 42% respectively through the end of the month, versus the prior year. The meat department? Up by 46%, 103% and 51%. And dairy? Up by 37%, 68% and 25%.
Everybody (except a few Wall Street analysts) knows you won’t come close to matching those numbers this year, as the pandemic begins to wane.
Sales up in 2021!
Across all Nielsen-IQ-measured departments, dollar sales were up just 4% in the last week of February 2021 and were off by 3% in the first week of March. Bigger declines are coming.
Without question, you’ll need to look back to 2019 and prior to plan and measure your growth. In 2019, frozen department dollar sales grew by 2.1% — on par with growth across all NielsenIQ-measured departments. Dairy department sales were up by just 0.5% in 2019.
In 2020, frozen department sales grew by 20.2%, and dairy department sales were up by 13.3%. But those big gains didn’t kick in until March, so it’s not surprising to see better year-to-date 2021 frozen and dairy department results for the early part of this year. However, weekly sales growth in recent weeks shows the trend is slowing (see chart), and that’s likely to continue for the rest of this year.
So, what do we do now? If retailers and manufacturers invest in growth and provide consumers with at-home solutions across meal occasions and with the right value messaging, I expect a decent year — at least versus 2019.
One last thing. Be ready to up your promotion. During 2020, NielsenIQ reported a sharp decline in promotion support measured by the percent of units sold on promotion (including feature ads, temporary price reductions and/or units sold on display). After all, consumer demand was so strong that retailers and manufacturers did not need to promote as much as they needed to stay in stock. As competition between at-home and away-from-home will intensify in 2021, closer attention will need to be placed on having the right price and right promotion support for frozen and refrigerated foods.