FMCG sales surged in March and April amidst continued pandemic panic purchases, but as new in-store measures took affect and consumers began to adjust to a new normal, sales in fresh categories began to soften, according to the latest data from Nielsen.
Overall though, the pandemic has spurred historic growth for FMCG categories. Nieslen says COVID-19 has contributed a remarkable 82 per cent of year-to-date growth in Q1 2020.
Record-breaking FMCG sales
The most notable impact from the pandemic has been the significant sales spike in FMCG categories. Year-to-date, FMCG sales surged 11 per cent due to record increases in March.
The week of March 21 was a record-breaking week for FMCG, with sales hitting close to $3 billion, an increase of 54 per cent versus the previous year, or an additional $1 billion in sales.
“To put that in perspective, fiscal 2019 increased $2.5 billion and on a year-to-date basis, 2020 sales have already jumped $2.2 billion,” notes Nielsen in data provided to Grocery Business magazine.
And while FMCG sales in March and early April continued to outperform the same period in 2019, figures show the rate of sales beginning to slow down.
For instance, FMCG sales reported a 10 per cent gain with $2.2 billion in retail sales, but a $112 million drop from the previous week. Sales the following week increased 22 per cent versus a year ago to $2.3 billion, but the uptick was due to Easter, and when compared to 2019, the growth dropped. Nielsen says the likely cause of this was that while consumers purchased Easter essentials like ham and turkey, they consumed less chocolate (-11 per cent when compared to 2019 Easter) “potentially due to smaller family and social gatherings.”
Changing purchasing patterns and consumer behaviours
As consumers begin to adjust to a new normal, the types of products they are buying and their purchasing habits are changing. During the first few weeks in March, top selling items were sanitizers, paper products, canned and frozen foods, but as consumers began to adjust to new realities, top selling items shifted to baking needs, alcohol, fresh meat and prepared foods.
And with new restrictive and protective measures in place in most grocery stores, shoppers are now adjusting by loading up their baskets while making fewer retail trips. And with stay-at-home restrictions in place, some categories tied to such restrictions (i.e. cancelled vacations and working at home) have actually declined, including insect repellents, sun care and cosmetics.
The other area that has seen sales softening is in value-added produce and fresh categories. Nielsen tracks the following categories that saw declines the week of March 21, 2020 versus the same period in 2019: -36 for produce fruit salad, -21 for produce mixed vegetables, -15 deli sushi/Japanese food, -10 for deli refrigerated pizza and -5 for in-store baked desserts.
Nielsen continues to monitor data and notes in its recent report, that retailers will need to “look forward, not back” on how COVID-19 will impact the industry in the near future.
To help guide retailers, Nielsen identified six consumer behaviour thresholds, noting that Canadians are currently at the fifth threshold of “restricted living” characterized by severely restricted shopping trips, limited online fulfillment and rising price concerns as limited stock availability impacts pricing in some cases.
In the sixth threshold, “living a new normal,” Nielsen says this will involve people returning to daily routines but operating with a renewed cautiousness about health, noting that there will be “permanent shifts the supply chain, the use of e-commerce and hygiene practices.”