2020 lockdown sales spikes have skewed year-on-year results, but it’s not all bad news says the team at IRI Worldwide NZ.
When comparing your sales to this time last year, you’d be forgiven for feeling a little underwhelmed. Don’t be. In the weeks following New Zealand’s first COVID-19 case in late February 2020, the Grocery channel grew at unprecedented rates.
Fast-forward 12 months, and sales can’t even begin to compare to those panic buying days when weekly growth peaked at a whopping 67.6% [1]. However, the latest four-week period, with its decline of 0.6% in value and drop of 3.7% in units [2] is far from the whole story, and these 2021 figures shouldn’t be considered in isolation.
If you compare the past four weeks with the same stretch of time in 2019, the picture becomes a little rosier. From this perspective, value sales are up 6.1% and unit growth has increased by 1.3% [2]. This is an approach being taken by Coles in Australia, whose chief executive is being pragmatic about numbers. “We won’t be able to grow topline sales,” says Steven Cain. “So we’re looking at a two-year view.”
Paul Hogan, IRI’s Senior Account Director, Client Services, suggests another helpful metric of performance is to consider brand results compared to the competition, as measured by market share. “Brands able to protect the gains they made in 2020, by holding onto new customers who trialed their products during COVID, or by sustaining more premium price positioning without sacrificing demand, will gain – or at least protect – share,” he explains. “It’s one of those areas that we’ve completely refocused on, and we’ve created a whole separate initiative, working with our clients to help them understand how to interpret their results.”
Of course, in 2021 COVID lockdowns are still very much a reality, and the behaviours which emerged one year ago are ever present. Despite repeated assurances supermarkets will remain open throughout any rise in alert levels, household shoppers have continued to target butter, flour, milk and coffee, as well as frozen and canned foods. And, of course, who could forget the toilet paper?
While we have moved on from the heady panic buying days of March 2020, when value sales of this essential commodity shot up 202.4% [1], Auckland’s mid-February lockdown saw them lift again by 19.7% [3]. It’s even become a topic worthy of comment by the Prime Minister. “It’s just so clear that, after repeated attempts, there is something about human behaviour that says when restrictions are in place, people will immediately feel the need to buy toilet paper, and I cannot explain it,” Jacinda Ardern wryly observed last month.
IRI has identified other pandemic-related trends at play in the Grocery channel, which will continue to impact performance. The shift to online shopping, meal subscriptions and larger weekly shops have reduced foot traffic and transactions in stores. This has also led to a reduction in impulse purchasing opportunities. We are seeing customers shopping less frequently and purchasing larger/multi-pack formats within categories. And undoubtedly, closed borders have led to a reduction in consumption, simply because there are less consumers in New Zealand compared to a year ago.
There are however sales bright spots – such as our latest market report showing value sales up 8.7% [4] in the pre-packaged Grocery channel, but as we’re now lapping the panic buying weeks from 2020 growth rates are going to be negative. This is not only an issue for New Zealand, this is a global issue for IRI’s clients, and we are committed to helping navigate these unchartered waters.
We say, don’t get too hung up on the year-on-year numbers. Focus on what you can control, and use the two-year comparison and your market share within category. Keep calm – and carry on, there’s plenty of cause for optimism!
Sources:
[1] IRI MarketEdge (Grocery) New Zealand, 1 week data to 22/03/2020
[2] IRI MarketEdge (Grocery) New Zealand, 4 weeks data to 28/02/2021
[3] IRI MarketEdge (Grocery) New Zealand, 1 week data to 21/02/2021
[4] IRI MarketEdge (Grocery) New Zealand, MAT data to 28/02/2021
