Categories
Insights

Where is the Growth for Grocery?

In this Insight Flash, we use CE Vision to:
  • Discover what is driving grocery growth…more shoppers, increased transactions, or higher spend per person
  • Find out if the grocery pie is growing, or are some grocers getting a bigger piece
  • Assess which demographic groups are driving these changes

With a coronavirus-driven rush to stockpile food in case there were disruptions to the supply chain in March, followed by the vast majority of the country’s restaurants closed for dine-in service during most of April, the grocery space appears to be one of the few bright spots in current economic growth.  Yet, the nature of the growth in this period is very different from what grocery growth has looked like in the past.  Spend has become substantially more concentrated, with shoppers sticking to their favorite stores and consolidating trips.  Online delivery growth has far outpaced in-store growth, but even the demographics behind the online surge point to a very different profile than might be expected.

CE Vision gives users the unique ability to break down growth into number of individuals, transactions per individual, and spend per individual.  Looking at New England grocers is specially enlightening as it allows a comparison between grocery-owned delivery service Peapod and independent startup Instacart.  Stop & Shop, Shaw’s, and Trader Joe’s provide a broad range of brick-and-mortar grocers for comparison.  Growth driver analysis shows that for all of the brick-and-mortar players plus Peapod, the number of unique customers making a purchase has fallen dramatically y/y in the weeks since the coronavirus started becoming a worry for the U.S. and states began enacting shelter-in-place orders.  Stop & Shop and Shaw’s both showed double-digit drops in unique individuals for each week in April (with the exception of Stop & Shop lapping an 11-day strike).  Trader Joe’s, which tends to be associated more with fill-in purchases, saw even more dramatic declines at over -50% since the last week in March.  Peapod declines have also been substantial, at around -20% each of the weeks the company wasn’t lapping the strike.  Instacart was the only brand to see growth in individual shoppers, around +400% for most of the weeks in April.  This dramatic surge in online shopping makes sense as consumers sheltered in place and tried to avoid leaving their homes for safety reasons, but is also evidence of Instacart’s ability to quickly scale because of its use of contract workers.  Yet, even the chains seeing declines in individuals shopping saw dramatic growth in spend per customer as shoppers stocked up and tried to minimize trips out of the house.  Shaw’s spend per individual was up over +50% in each week of April, Stop & Shop was up over +40%, and Trader Joe’s was up +70-90%.  Peapod spend per customer was up around +20% in mid-March, and has slowly grown to around +50% in the past three weeks.  Instacart, despite its huge surge in customers, has only seen spend per customer grow +35-40% over the same three weeks.

Growth Metrics

Stop n Shop Transactions vs. Spend Per Customer Chart
Shaw's Transactions vs. Spend Per Customer Chart
Trader Joe's Transactions vs. Spend Per Customer Chart
Peapod Transactions vs. Spend Per Customer Chart

Although one might argue that the spend per customer increases just represent more meals being eaten at home and the overall grocery wallet expanding, CE Vision allows users to track wallet share specifically, in order to help brands see whether their growth is coming from a larger industry pie or their ability to capture a larger piece.  In this case, it is very clear that brick-and-mortar shoppers are concentrating spend and that their favorite (or nearest) grocers are capturing more share.  In April of 2020, Stop & Shop captured over +12% more Multioutlet + Convenience wallet share from its customers than it did in February.  Shaw’s captured slightly under +7% more, and Trader Joe’s captured over +8% more.  Peapod captured only less than +2% more wallet share, perhaps a sign that Peapod users had already been concentrating their grocery spend in the delivery service – this is further supported by the fact that Peapod has the highest overall industry wallet share in the group at ~50% for both February and April 2020.

Share of Wallet

Share of MULO + Convenience Wallet  April 2020 vs. February 2020 Chart
Note:  Instacart not included since not all spend is in MULO (Multi-Outlet) + Convenience Industry

Finally, what is interesting is not only how spend is concentrating, but also how various demographic groups have shifted their spend.  CE Vision allows users to track nine different demographics over time to see where new spend is coming from.  In this case, what is interesting is that the hotshot internet startup isn’t attracting the edgy millennials.  Instead, Instacart has seen the biggest penetration increases in April 2020 vs. April 2019 in older shoppers.  Those aged 65+ represent +8.0% more of total Instacart spend than they did a year ago, with those ages 55-64 representing +5.1% more of the total share.  Peapod is seeing a similar phenomenon with spend share of those aged 55-64 up +2.6% versus a year ago and spend share of those aged 65+ up +0.3%.  Trader Joe’s is seeing its biggest share of spend increases among those aged 45-64, but also among the 18-24 year old group.  Shaw’s is also seeing increasing spend from the 18-24 year old group, perhaps as this group dines out less or as college students who can’t go home find dining halls closed.  Stop & Shop has seen the largest share of spend decline in the 65+ age group of any retailer.

Demographics:

April 2020 vs. April 2019 Change in Spend Share by Age Chart