Building off of last month’s cover story on how retailers can make sure frozen gains stick, I believe food retailers need to position themselves as a better value versus restaurants. There’s been greater inflationary pressure on food-away-from-home. The consumer price index for this segment rose by 4.9% during the 12 months ended June 2021 versus a food-at-home CPI of +0.9%. I would like to see more food retailers create messaging around the value of at-home meals. Educate your shoppers on how they can stretch their food budgets through:
—Purchasing frozen pizza and meals versus offerings from the restaurants.
—Leveraging frozen and refrigerated categories with categories across the store to create multiple meals throughout the week.
For anyone still worried about how frozen and dairy sales are down from last year, please relax. Coming off historic growth in the first half of 2020, NielsenIQ reported modest dollar sales declines in the frozen (-1.9%) and dairy (-2.4%) departments during the first half of 2021. But consider this: during the first half of 2020, dollar sales grew a whopping 23.6% for the frozen department and a very respectable 16.1% for the dairy department. Using 2019 as a more realistic basis for trend purposes, 2021 dollar sales have grown at similar levels as 2020, with frozen climbing 21.3% and the dairy department up by 13.4%.
Without the benefit of inflationary pressures aiding dollar sales growth, unit sales growth declined at higher rates during the first half of 2021. Frozen units fell by 3.7% and dairy units declined 3.5%. Both had reported impressive unit growth during the first half of 2020 with frozen up 15.1% and dairy up 7.8%. Versus 2019, frozen units in the first half of 2021 jumped by 10.8% and dairy units grew 4.1%.
Digging into weekly NielsenIQ dollar sales trends illustrates how both departments are still benefiting from an uptick in at-home meals. That’s true for several reasons: Elevated levels of virtual at-home workers and students; a high number of unemployed individuals (9.5 million in June); increased demand for contact-free shopping; and reduced operations/seating at many restaurants.
But to get back to my original point, restaurants have more vulnerability coming out of the pandemic than retailers at this point. Show your shoppers the math on how they can save with at-home meals from the frozen and dairy aisles!