A Year After Panic Buying Began, Grocers Expect Sales Downturns

Now that we're just about to celebrate the (not so happy) one year anniversary of Covid-19's dangerous disruption of our daily lives, it'll soon be possible to compare data about how things have changed from those early panicked days of March 2020 to the "new normal" of March 2021.

While we're all generally breathing a little easier than we were a year ago, grocery stores aren't exactly liking the changes they're seeing sales-wise. After significant gains in 2020, retails are seeing sales recede a bit from where they were this time last year. For example, CNN notes that Kroger expects a three to five percent sales contraction this year after posting an impressive 14.1 percent gain for 2020. Grocery Outlet, a more discount-oriented offering, expects to post a high-single digit dropoff in Q1 2021 after a 12.7 percent gain last year.

This early data tracks with analyst expectations that grocery sales will decline in 2021 for the first time in twenty years. CNN cites a January research report from UBS analyst Michael Lasser, who expects a five percent drop across the industry after an 11 percent gain in 2021.

Lasser estimates that the pain of that five percent drop will be felt a bit unequally. "Smaller, less differentiated retailers remain at a disadvantage compared to retailers with scale and greater buying power," he told CNN. "They also have fewer resources to invest in their online offerings" compared to bigger players like Walmart.

So far, the data bears that out. Though Walmart's 8.6 percent growth in 2020 was comparatively more modest than some of its competitors, the company expects to maintain growth in the low single digits over the course of 2021.

Based on an anecdotal assessment of the situation, the reason for the downturns from 2020 to 2021 aren't too shocking. Last March, the widespread closure of restaurants meant we all had little choice but to feed ourselves at home, and the sight of bare shelves certainly spoke to the increase in demand. Now that life is ever-so-slowly inching back to normal thanks to vaccination and the proliferation of outdoor dining options, we all seem to have taken a break from cooking quite as often.

So while grocers may feel a bit of a pinch, the factors influencing the downturn in sales (after a period of sizable growth) are good for the rest of us. Take it as another sign that things tend to even out in the long run.