In 2022, the news for our industry has been a mixed bag. But, hey, trade shows are back!
When you have good and bad news to share, psychologists say it’s better to start with the bad. So I’ll begin with the results of 1010data’s 2021 report on online grocery sales. According to the retail and consumer goods analytics firm, supermarket e-commerce sales jumped 8% last year. But fully half of that absolute growth was driven by Instacart, whose sales shot up 14%. Heavy hitters like Publix, Aldi and Kroger all increased their share of sales through Instacart’s platform.
DELIVERY PERISHABLES DOWN
That’s all well and good until you look at shifts in the types of products being purchased through Instacart and Shipt. While sales of shelf-stable foods and beverages continue to climb, sales of perishable foods are falling. For example, during the nine-month span between January and October 2021, sales of soft drinks, salty snacks, juice and water were up double digits, while sales of eggs tumbled 9% and ice cream, 4%.
The implication, of course, is that perishables delivered to consumers’ homes via third parties aren’t arriving in good condition, so shoppers are either not
buying them at all or, more likely, buying them elsewhere — perhaps from a competitor or maybe even direct from the manufacturer.
Now, this may not seem like a big deal, but as delivery continues to grab a bigger share of the grocery business, it could become one. If shoppers are skipping entire departments because they’re not confident the guy delivering groceries out of the back of his Toyota can maintain the proper cold chain, well…that’s eventually going to impact the bottom line.
A second piece of bad news released last month came from NielsenIQ, which reported U.S. retailers missed out on a whopping $82 billion in CPG sales last year as a result of out of stocks, which averaged 7.4%. OK, sure, the FMCG sector tallied $970 billion in sales in 2021, up 2.1% from 2020 — and on the heels of an 11.9% gain the year before. But still!
Nielsen said that 46% of out of stocks led to a lost sale for retailers. When their preferred product isn’t available, 20% of consumers will postpone the planned purchase, 10% will buy the item elsewhere and 16% will look for it online. The company also reported that fruits and vegetables, including frozen, were especially hard hit by shortages in 2021.
To help blunt the impact of the product shortfalls, retailers decreased the number of SKUs by 10% last year. Many scaled back promotions as well since the out-of-stock rate doubled when products are on promotion. If you haven’t already taken those steps, what are you waiting for?
NOW FOR SOME GOOD NEWS
Live shows are back! AFFI-CON went off without a hitch last month, and at press time, I was packing my bags for Natural Products Expo West in Anaheim. From April 4 to 6, the National Frozen & Refrigerated Foods Association (NFRA) will hold its Executive Conference in Tempe, Ariz., followed by its annual Convention Oct. 15 to 18 in Orlando, Fla. If you haven’t registered yet or want more information, go to nfraweb.org.