Pandemic boost for grocers: $6 billion a month
When the pandemic closed schools and restaurants last winter, Americans went to the supermarket to stock up on food for the stay-at-home weeks. Grocery sales skyrocketed by 32% last March and have remained strong, averaging $6 billion a month above pre-COVID levels, said the Census Bureau on Wednesday.
Overall, grocery sales were 11% higher during 2020 than in the preceding year, an average of $63 billion a month, according to data compiled for the Census Bureau’s monthly Retail Trade report. The advantage continued into this year. Sales in January were slightly more than $64 billion, according to preliminary figures.
The increase in sales in 2020 was in line with a Supermarket News survey last August in which 55% of food retailers and distributors said they expected an increase in sales for the year of at least 10% in “center store” products, such as snacks, paper goods, frozen foods, and canned and dry foods. Half of respondents said online retailers — rather than longtime competitors such as Walmart and club stores — were their biggest threat amid the pandemic. Their response was to offer home grocery delivery or curbside pickup, and to keep an eye on prices.
The rush to the grocery store caused spot shortages in items such as canned soup, milk, meat, and toilet paper as food makers adjusted production lines to respond to the surge in retail sales.
Led by beef’s 5.3% increase, grocery prices rose 3.9% during 2020, according to the Consumer Price Index. “All six major grocery store food indexes increased over the period,” said the Bureau of Labor Statistics. Food prices usually track the overall U.S. inflation rate. The USDA forecasts a more normal rate of food inflation, around 1.5%, this year.
The economic recession that accompanied the pandemic had a relatively mild impact on total food spending, said USDA economists. In a new report, they said the recession increased grocery sales by nearly 1 percentage point and depressed spending on food away from home by roughly an equal amount. Overall, expenditures on food rose only marginally from 2019.
While grocery sales soared to $72.6 billion in March, sales at “restaurants and other eating places,” as the Census Bureau classifies them, were cut in half, falling to $27.7 billion in April, after the pandemic took hold, from $54.1 billion in February, before the stay-at-home orders. For the year, sales were down 15.5% from 2019’s level.
The reduced sales continue this year. Preliminary figures for January for “food services and drinking places” are nearly 16% lower than in January 2020. The preliminary Census data do not include figures for restaurants and other eating places, a subset of the broader food services and drinking places category.
Census Bureau data on the retail trade is available here.