Will Retail Retain the Rewards of Higher Sales?

Jim Prevor

Originally printed in the December 2020 issue of Produce Business.

In the frantic days of March 2020, when supermarkets were overwhelmed by fearful and sometimes hysterical customers, produces sales went up — how could they not when restaurants were closing down and people were afraid that supermarkets would also close? Still, produce sales never jumped the way, say, canned soup did — how could fresh sales jump when consumers weren’t sure when they would be able to shop again? They needed non-perishables, not things that would be rotten in a week or two.

Other changes revealed themselves with time. With consumers home, either because they were working remotely or had lost their job, they often had more time available. As a result of this, they were willing to devote more time to cooking. Indeed fresh-cut sales suffered as many home-bound consumers figured they would save money by cutting up their own produce.

Some consumers used their quarantine days productively. Even if they had lost their jobs, they exercised, engaged with family and cooked healthy and delicious meals. Others, well… it is easy to understand people falling into depression in times like these. Indeed, one of the failures of our public policy over the pandemic has been a failure to assess how policies such as quarantining can cause negative health outcomes such as depression and suicide.

Still, perhaps the single biggest food-related question out of the pandemic is whether, and to what degree, consumers will have come to enjoy cooking and eating meals at home and so, to what degree can we expect food purchases at supermarkets and via delivery services to remain elevated?

Obviously, if the economy is bad, falling into a deep recession or depression — we would see more at-home eating, and this could sustain high supermarket sales. If, however, the economy rebounds quickly as the vaccines proliferate, we don’t know how eating patterns will change. Chatting with Lisa Cork of Fresh Produce Branding Ltd., in New Zealand — where, internally, the virus has been virtually wiped out — she reports that though everyone is free to go anywhere, meetings that last year would have been visits to a physical office, perhaps with lunch before or after, now are often still being done on Zoom.

Perhaps this represents the kind of change that will have an enormous impact on the food industry. But, perhaps not. Lisa and this author have been “road warriors” for decades. But our “vehicle” has been more likely to be a 747 than a car. Even if we assume that some travel will be eliminated because of Zoom and similar services — and that all of us will buy more things online — the question still remains: How we will use the time and money saved?

It is true that technology reverberates. So the invention of streaming services — such as Disney+, Netflix and HBO Max — may lead to people prioritizing large screen TVs and in-home theatre rooms, and this in turn may lead to people spending more time at home and thus eating more at home. This might well mean more home cooking, but it could also mean more take-out and delivery by restaurants.

In chatting with key retailers, most are optimistic that their companies will retain a big portion of the added sales brought on by the pandemic. These are smart people, with access to the best research. Yet, this author has his doubts.

Foodservice has been rising as a share of money spent on food for 100 years. Despite the blip this year due to the pandemic, the drivers of this trend remain and, indeed, may become stronger as a result of the pandemic. In the short term, the realities of life have driven the trend to foodservice. If your children have sports teams they are still playing on, it is a lot easier to zip into a drive-thru than to cook a whole meal to be ready at an often difficult-to-predict time. When Great Grandma lives much longer, and she lives in a special retirement home, often someone else has to serve up her meals.

Of course, there may be countervailing trends. Will more college students stay home because of Zoom classes? Perhaps.

But the more time and money people have available, the more likely they are to want to travel. The more hours they are at home for work or school, the more likely they are going to want to get out of the house and enjoy restaurants with friends and family.

New technologies are also likely to emerge. The Virgin Group and Japan Airlines have, collectively, ordered $6 billion of new airlines from Boom Supersonic. JAL also invested $10 billion. How will we use this technology? Maybe business people will zip back from Europe to catch dinner with their families on a one-day trip. Or maybe, with less need to go to the office, we will travel more across the globe, eat more outside the home, and the pandemic will fade, a memory of a sad time and a moment not missed by anyone.



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