What Centricity learned when panic buying met Black Friday

NEW YORK, Dec. 10, 2020 /PRNewswire/ -- 2020 has proved to be anything but predictable, simultaneously handing Americans the highest unemployment rates since the Great Depression and the most lucrative day of online sales in history. Go figure.

Retailers and CPG companies have long been tasked with predicting the unpredictable. But this year, a global pandemic has delivered their greatest challenge yet: adapting to the COVID economy now, then making sense of what comes next. Below is Centricity's account of what we've seen so far.

Spending more time at home, not spending less money

With the virus surging, the economy suffering, and stay-at-home orders sweeping the country, it looked for a while as though the retail industry may have been in line for a significant downturn this year. That type of spending decline, however, hasn't happened. While in-store shopping may look different these days, the Retail industry hasn't suffered overall.

Centricity has been tracking the trends this year, and what we've seen hasn't been a sharp decline in spending, but rather an adjustment in spending priorities. Where and how people are spending their money has changed, reflecting the dramatic change in circumstances for many Americans, brought on by the pandemic. More time at home has played a big role in the goods consumers have been targeting.

"We're seeing a lot of demand for feel-good items, things like spices and other slow-cooker recipe ingredients," Centricity CEO Mike Brackett told Good Morning America last month. "A lot of millennials perhaps hadn't done a lot of cooking before because they hadn't had to."

With people staying home, many have adapted their lives — and their spending — around that reality. Centricity has seen an increase in demand for non-perishable items that people could cook ahead of the holidays, then keep without going bad until the time came to eat them.

"Whatever can be frozen, whatever is non-perishable that you can safely keep until the holidays, we're seeing a lot of demand for that." Mike said. These kinds of items afford the dual benefits of easier meal prep and being able to stay away from the crowds that typically inundate grocery stores around the holidays. Investing in ways to make time at home more enjoyable is especially reflected in households with children. Centricity has seen a surge in demand for at-home toys and games, with "pretend play" sets up 93% and motor skills toys up 106%.

Walmart's recent quarterly report reflected this trend as well, stating that in-person traffic was down slightly this quarter, but average spending per receipt rose 24%. Overall, these numbers indicate that more shoppers are following CDC guidelines and consolidating their trips to the store, but clearly not reducing the amount they're buying. Clearly, the hit to retailers that many predicted at the start of the recession hasn't come to fruition.

A surge in panic buying meets an unprecedented Black Friday

Supply chains were stretched to their limits during the first wave of COVID-19, with shortages of paper goods, cleaning supplies, and other items resulting from widespread pantry stockpiling and panic buying. During the second wave, retailers and distributors have taken steps to ensure their shelves are stocked. But this time, a surge in new coronavirus cases is coinciding with the holiday shopping season, which is routinely the Retail industry's busiest time of year.

Retailers have stocked up on many products, but demand seems to only be rising, especially among those who are choosing to shop online. Adobe forecasted that Black Friday online sales would hit between $8.9 billion and $10.6 billion, representing growth of 20% to 42% year over year. Thanksgiving saw a record $5.1 billion in online sales.

This surge is leaving many retailers rushing to complete deliveries at the same time as shortages of products like paper goods, cleaning supplies, and breakfast foods are again affecting the country. Over the past month, Centricity data has shown that demand for items such as paper towels, disinfectants, spices, canned goods, and broths has jumped 60-70%.

"During this pandemic there's been a totally different buying pattern, explained in part by a new generation cooking a lot more than they used to, simply out of necessity," Mike told Good Morning America.

"You have this perfect storm now, where America's supply chains are still recovering from the first wave of panic buying. And now you have the largest selling season of the entire year on top of that."

The more things change, the more they…just keep changing?

One big question that remains coming out of this year is what we'll be left with once the dust settles. The pandemic has changed so much in the short term, but the lasting, long-term impacts remain a mystery. Will products like dutch ovens and Pelotons continue their surge once restaurants and gyms are completely reopened? Will people continue investing in home improvement once they can vacation again?

Those specific questions may be answered rather swiftly upon a return to semi-normalcy, but we could be waiting a while to get clarity on more fundamental shifts in the retail and CPG industries. A prime example is in the ways consumers are shopping for, and receiving, their goods. Before the pandemic, buy online, pick up in store offerings had been emerging as an area of focus for many retailers, but the idea of curbside pickup was mostly an afterthought in that equation. COVID-19 has flipped that approach on its head, propelling curbside pickup to the forefront of retail strategy.

During Thanksgiving week, retailers that offered curbside, drive-through, and in-store pickup increased digital sales at a 26% higher rate than retailers who didn't offer those services, according to Salesforce. These click-and-collect services have been a boon to sales during the pandemic, but analysts say that those who have tried it have always liked it—there are just more people trying it these days.

Trends like these may have more staying power than previously thought, leaving industry leaders with more questions than answers as they consider their post-pandemic strategy. With Retail and CPG companies facing unprecedented volatility, Centricity believes that committing to forward-looking data will be the only way for leaders to ensure they are the first to answer the most pressing questions of consumer demand.

SOURCE Centricity, Inc.