Consumers Choose a Few Well-Known Brands as Online Grocery Shopping Explodes

There is little question about the impact the coronavirus pandemic has had on day-to-day life in America. One of the fastest changes brought on by the pandemic has been a move by consumers to contactless options for shopping.

Spending on each trip to the grocery store has increased, with fewer trips to the store and far more online orders. According to census data, the average U.S. household spent $525 per month grocery shopping in March, up 30 percent year-over-year. That number fell to $455 per month in July, up to 10 percent from last July. The decline from March to July is partially due to consumers spending less on groceries as states began re-opening.

Although overall spending has increased, time in stores has dropped, meaning shoppers favor a smaller set of items in larger quantities. That is why some brands have shifted to cutting a broad range of products to just a few staples that are popular with consumers.

Frito-Lay said that the shutdown led it to cut unique bar codes, limiting the products offered in stores.

“We reduced about 21 percent of our SKUs to deliver the volume of our most in-demand products, ensuring availability everywhere for consumers,” said Mike Del Pozzo, senior vice president of sales for Frito-Lay North America. 

With consumers spending more on shopping and preferring tried-and-true foods, manufacturers may not find an incentive to go back. Brands like Doritos, Oreos, and Campbells have all seen a sharp jump in sales during the pandemic. Most of those sales are geared towards their most popular items, leaving new or alternative flavors on the shelves.

However, online shopping, especially for grocery pick-up or delivery, has meant fewer choices for consumers.

Part of the problem is how slowly supply chains are able to adapt. When outbreaks began at meat processing facilities, shortages started because plants were forced to shut down, taking certain products off the grocery shelves for consumers.

But consumers see fewer options even for products not facing shortages. One reason could be the way consumers shop online.

“If you go stand in the salty-snack aisle of Kroger, there is probably a sampling station. You pick up a bag, read the nutritional panel,” Franklin Isacson, founding partner of Coefficient Capital, told The Washington Post. “Whereas on Amazon, you’re typing in ‘Heinz ketchup.’ You’re not going to discover Sir Kensington. People that buy groceries online tend to buy the brands that they know, the brands that have highest unprompted awareness.”

Now newer and sometimes healthier options can’t market the same way bigger companies can through online ordering. Companies are paying for advertising and computer algorithms determining the products people see first, according to Max Pedro, co-founder of Takeoff Technologies, which makes robot automation for supermarkets.

“Last century that was paying for the end cap; now it’s who does it show first, and it’s even worse on a phone where you can see just a handful of products,” Pedro said. “It does perpetuate existing habits, for the good or bad.”

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