What’s going to happen next in grocery? IRI has analysed basket data and customer behaviour from Italy over the past two months to find a number of trends that may offer some guidance to UK manufacturers and retailers in the weeks and months to come
We’re living through something that none of us have experienced before. None of us have any UK blueprint that would help guide us through the coming weeks and months.
In the midst of the coronavirus pandemic, challenges have been many and varied, not least making sure that our family, friends and employees are safe and well. From an industry perspective, many supermarkets have understandably struggled to restock shelves fast enough. Brand owners have battled to keep up with production demands and difficult decisions are being made with regards to range. When firefighting is the priority, how can we start to prepare ourselves for what’s to come? Particularly when we don’t know what’s coming?
To try to understand what lies on the horizon, we look to shopper and market insights from those who are slightly further along the curve than us. Italy entered lockdown weeks before the UK and unsurprisingly, we have seen large-scale change in Italian shopping behaviour during the period.
Hypermarkets will suffer
Small stores and local supermarkets are winning in Italy, thanks to their proximity and ease of access, while out-of-town hypermarkets are losing out due to the limitations on movement presented by social distancing. This has meant a 41% increase in convenience store visits, while hypermarkets have seen an 8% decrease in sales. Interestingly, discount stores are also seeing a 28% boost in visits, perhaps because of personal financial concerns in difficult times.
Click & collect will see a boost midweek
We’ve already seen a rush to online delivery services in the UK, with many supermarket delivery slots booked out for weeks. In Italy, which already starts from a much lower base than the UK when it comes to online, we see a strong growth trend for click & collect in response to this. It has accelerated more than 300% during weekdays. Consumers will look to organise collection to minimise hassle and time in the store while home delivery is unavailable.
Interestingly, weekends are less popular for click & collect, but even so, growth overall exceeded 180%.
Major announcements will lead to spikes in shopping behaviour
Our data shows that Italians rushed to shop for groceries following large, or troubling, news announcements. In particular we saw sales figures start to rise for the first time (by 1.8%) on 21 February, the day of the first recorded death in Italy. This rose again to a 104.4% increase by 24 February, when seven deaths had been recorded and a lockdown in the state of Lombardy was in place.
We can also see a spike of visits to the supermarket in the south of Italy on Tuesday 10 March, the day after the whole country was placed into lockdown after an initial northern restriction, as shoppers nationwide made sure they had access to groceries ahead of restrictions in their region.
With major government announcements continuing to take place on weekdays – particularly Mondays – it is likely that shopping patterns will continue to spike midweek.
Basket sizes will increase
In Italy, it seems shoppers are spending more to stock up on goods that will last them through a long period. Overall, there has been an increase in average basket price from €45 to €76, a rise of 46%.
Those baskets are filling up with non-perishables and canned or dried goods, such as tinned meat (94.1% sales increase year on year), dried veg (109.1% increase) and beans (92.9%). And the UK isn’t the only country to see pasta fly off the shelves. Italian sales of pasta are also up, by as much as 61.4% on sales figures from the previous year.
The trend for home baking will also continue; sales of yeast (147% increase) and flour (up 159.8%) were two of the top 10 growth products in the past week in Italy, while pastry ingredients rose 82.6% in the same week.
Disinfectant sales will continue to rise
Given the importance that has been placed on hygiene during this pandemic, it is no surprise that disinfectants will increase in sales – but perhaps the scale of the growth will surprise retailers. In Italy, the two fastest-growing product categories over the past four weeks have been disinfectants, rising 220.4% in sales year on year, and wipes, which rose 154.2%. As lockdown continues in the UK, we should expect to see shoppers continuing to focus on cleaning and disinfecting their homes and replenishing those items more frequently.
Snacks will fall
With fewer packed lunches being made, pre-packed snacks may stop appearing in customer baskets. In Italy, snack category products fell by 5.8% of sales year on year in the week the nationwide lockdown was announced, while sweet snacks fell 12.4% the week after the announcement. However, it seems people do still want some treats in a crisis: chocolate bars rose 22% in the same week.
By drawing on learnings from the Italian market, it is possible for the industry to try to understand what the future might look like for the UK and to mitigate risks during this uncertain period. The big question will be this: how much of this change is permanent?