WASHINGTON, DC — As the pandemic curve finally starts bending, consumer behavior is beginning to flip-flop. Retail is slowing down and restaurants are quickly picking up steam. But what does it really look like in the big picture?
This was the theme for a NextGen Baker webinar, held exclusively for American Bakers Association members, hosted by Todd Hale, principal and retail insights thought leader, Todd Hale, LLC.
“My expectations are that we’re going to see lower at-home consumption as a result of things easing up, but things will still be very positive, relative to pre-pandemic,” Hale observed.
In looking at foodservice trends, numbers are not yet back to where they were pre-pandemic. “We saw some deep declines in sales in March and April last year,” Hale said. “But we’ve seen growth. Sales are up compared with 2020.”
Foodservice sales are up $1.1 billion from 2019, and while there’s still a ways to go — that number is actually down 4% from 2019 — year-to-date sales are up by 15%, so the needle is trending in the right direction.
At retail, Hale noted that some of the sales numbers are beginning to slow. For example, Sam’s Club grew faster in the first quarter of 2020 than this year, and the same was true for its sister company Walmart, which has had a healthy 6% same-store-sales growth this year but doesn’t quite compare with the nearly 10% increase in 2020. However, on a two-year stacked basis, Walmart same-store-sales were up 16% versus 2019.
“Trying to plan the future based on what happened last year could be troublesome,” Hale said. “We need to look longer-term and, in many respects, ignore 2020 and focus more broadly from 2019 to 2021 and how trends look beyond that.”
“Trying to plan the future based on what happened last year could be troublesome,” Hale said. “We need to look longer-term and, in many respects, ignore 2020 and focus more broadly from 2019 to 2021 and how trends look beyond that.”
At foodservice, a comeback is on the horizon after a full year of seemingly insurmountable challenges, including roughly 110,000 restaurants closings, according to the National Restaurant Association.
As the vaccines started rolling out and restrictions started to lift in the first half of the year, hope sprung. Papa John’s comparable sales grew 26% in the first quarter, compared with 5% last year, Hale said, noting that most QSR chains are reporting significant growth.
In looking at sales growth — or, perhaps survival — for foodservice from 2019 to today, carryout has had a significant impact. “It’s obviously becoming a big part of the business,” Hale said, especially as in-house seating capacity remains a challenge, especially for operators who focus on breakfast.
In looking at the health of foodservice from 2019 to today, the pandemic year looks a bit like a chasm, with 2021 on the upswing.
Conversely, the retail curve looks the opposite, spiking sharply upward in 2020 and now trending down a bit toward something that looks a little more like “normal.”
Because of the phenomenal growth in dollar sales across most departments in 2020, results in 2021 will show slower or no growth. In Q1 2020 vs. Q1 2019, 15 of the 16 departments measured by NielsenIQ delivered growth, while only five departments delivered growth in Q1 2021 vs. Q1 2020. However, changing the reference point to Q1 2019, 11 of 16 departments grew and the grocery department, where most ABA-member categories are sold, grew 13.4%, on par with the 13.8% growth achieved in Q1 2020 vs. Q1 2019. The fresh bakery grew by just 1.3% in Q1 2020 vs. 2019 and growth increased 5.3% in Q1 2021 compared to Q1 2019.
For both foodservice and retail, as consumer spending inches back toward a semblance of normalcy, 2020 looks more like an anomaly, but it gives these businesses a broader view of how to gauge what growth actually looks like and how to plan accordingly.
“We see a lot of manufacturers, retailers and restaurants talking about two-year stacked metrics,” Hale said. “Rather than looking at 2021 vs. 2020, they’re also looking at it versus 2019 because it gives a more realistic picture of growth and a better way to forecast in terms of data points rather than focusing on the outlier.” Case in point, Walmart’s reported 6% same-store-sales growth in their first quarter of 2021 increased to 16% on a two-year stacked basis.
For more information on ABA webinars, visit www.americanbakers.org.