Kennedy: As retail takes a hit, grocers see an increase in sales

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Prior to this week’s devastating government report that retail sales could see their biggest monthly decline on record in March, a handful of food retailers acknowledged fuller coffers for the month as consumers responded to the coronavirus pandemic by stocking up.

Discounter Target, for instance, put overall March sales up 20 percent from a year ago, with sales in food/beverage and “essentials” alone jumping more than 50 percent.

Ahold Delhaize, the Netherlands-based grocer with five supermarket chains on the East Coast, including Hannaford locally, reported U.S. sales rose 34 percent in March compared to a year ago.

Of course, the sudden burst in buying — which led to supply chain disruptions and shelves stripped of toilet paper and other products — won’t translate into pure profits.

Target said adjustments made in employee pay and store hours as a result of the pandemic “are expected to add more than $300 million of incremental costs to the company’s prior outlook for the first quarter.”

Ahold said it did likewise, and while not putting a dollar figure on the costs, said they “have become material towards the end of Q1,” which could affect the underlying operating margin level for the full quarter.

Target, Ahold and other retailers will report fiscal first-quarter results next month.

Target offered some insight into the demand wave that slammed food retailers starting late in February. After an initial uptick in foot traffic, an “even stronger surge” came in mid-March as consumers sought out not only food, beverages and paper products, but also “hardlines” that reflected more of them working and sheltering at home.

The timeline mirrors one published last week by NCSolutions, which tracks consumer behavior across various media for advertisers. Based in New York City, it identified five stages of consumer buying during the pandemic.

First was the “business as usual” phase, prior to Feb. 24, when buying followed typical seasonal patterns. Then came “preparedness buying” through early March as news circulated about the spread of Covid-19, the respiratory illness caused by the coronavirus.
“Extreme buying” occurred between March 11 and 21 as consumers began to seriously stock pantries, clearing shelves of some items. Currently, according to NCSolutions, we’re in the “home-confined buying” stage, where visits to stores are somewhat limited by stay-at-home and social-distancing rules — although buying levels are still higher than in the pre-coronavirus period.

Next will come “new normal buying,” which NCSolutions says won’t occur until states f emergency are lifted and consumers feel more comfortable returning to stores.
What will that look like? No one is sure.

“This pandemic is altering consumer purchasing behavior, although it’s too early to tell if the change will be permanent,” says NCSolutions CEO Linda Dupree. But her guess is that brand loyalty may be tested, so advertisers would be wise “to build new consumer connections.”

Marlene Kennedy is a freelance columnist. Opinions expressed in her column are her own and not necessarily the newspaper’s. Reach her at [email protected]

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