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Out-of-stocks during pandemic lead to billions in missed CPG sales

Baby Boomers spurred online grocery shopping growth in 2020, Oracle analysis shows.

Russell Redman

March 29, 2021

4 Min Read
COVID-19 pandemic grocery shoppers Kroger
Kroger

Ten consumer packaged goods (CPG) categories accounted for nearly $3 billion in lost sales due to out-of-stocks during the COVID-19 pandemic, market researcher NielsenIQ found.

Meanwhile, baby boomers led the way in growing online grocery shopping, outpacing Generation X, millennials and Generation Z, according to Oracle Advertising.

Chicago-based NielsenIQ said Wednesday that an analysis of the May 2020 to February 2021 period shows that, even after that two-month spurt of panic-buying by U.S. consumers upon the coronavirus outbreak, out-of-stock issues lingered in supermarkets through the rest of the year, leading to billions of dollars in missed sales.

Among the top 10 CPG categories with the highest missed-sales values, more than $2.93 billion in purchases were lost during the period, the NielsenIQ On Shelf Availability Barometer revealed.

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Probably unsurprising to most Americans, bath tissue and paper towels tallied the most lost sales from out-of-stocks, totaling $836.56 million and $689.29 million, respectively. Those categories were followed by missed sales of $352.05 million for multipurpose cleaners, $273.55 million for dog food and $209.22 million for cat food.

Rounding out the top 10 categories in missed sales were ready-to-eat cereal at $136.86 million, laundry detergent at $136.4 million, bath and shower soap at $111.37 million, multiserve pizza at $103.7 million and soup at $84.17 million.

Missed-value sales are defined as purchases lost because retailers didn’t have on hand in their stores what customers wanted to buy. NielsenIQ research found that 30% of shoppers surveyed will go to new stores when they can’t find what they want in their current stores. Likewise, 70% of shoppers will buy another brand when a product they seek isn’t available.

“As one of the easier retail problems to fix, managing out-of-stocks is clearly critical, as it significantly affects the revenue of manufacturers and retailers,” according to Richard Cook, intelligent analytics leader at NielsenIQ. “Not only can retailers lose a significant amount of their sales if the products are not on the shelf, but out-of-stocks also result in reduced customer satisfaction and lower loyalty levels.”

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Going forward, greater availability of COVID-19 vaccines could pressure inventory on some seasonal CPG categories, as consumers feel more confident to venture out, Cook added.

“As we see vaccinations rise in the U.S., with people yearning to socialize and be with their families, we might see out-of-stocks on Easter items—similar to what we measured during the Thanksgiving and Christmas holidays last year,” he explained. “Warmer weather and the reopening of schools could put pressure on categories like sunscreen, lunch meat and insect repellent in the coming months. Getting the right analytical models in place to avoid out-of-stocks is essential to ensure retailers and manufacturers don’t miss out on millions in value sales.”

Oracle Advertising, the ad services arm of Austin, Texas-based data giant Oracle, unearthed some similar out-of-stock trends.

For example, Oracle Advertising’s New Consumer report found that shoppers tried new CPG brands at “unprecedented” rates, with 43% of purchasers were new to a brand in 2020 versus 32% in 2019. Repeat purchase rates also are up, reaching 24.7% in 2020 compared with 23.3% in 2019. The report evaluated Oracle CPG Retail and Point of Sale Transaction data, representing over 75 million U.S. households and $762 billion in annual consumer spending from February to December 2020.

Surprisingly, Baby Boomers dominated online shopping growth, with 5.7 times as many consumers shopping online for CPG-related products in 2020 than in 2019. And Oracle’s analysis shows there’s room for more growth, since new Baby Boomer online customers are spending only half the amount of money versus current Baby Boomer online shoppers.

At the same time, Gen X saw 4.7 times growth in new online shoppers, compared with 4.3 times for Millennials and 4.6 times for Gen Z. Online spending for CPG products rose across all generational groups year over year, Oracle noted.

The rise in eating at home during the pandemic had Baby Boomers opting for home cooking, whereas younger shoppers leaned toward convenience foods. Baby Boomers focused on “from-scratch” cooking and often purchased “meat and potato” meals (31.1%), Oracle’s report showed. Millennials (29.4%) and Gen Z (26.2%) skewed toward quick-prep meals, such as frozen foods.

Oracle’s retail and POS data revealed that demand for prepared foods, such as boxed dinners and frozen pizza, peaked early in the pandemic, from March to May 2020, and remain high today. Home cooking CPG segments—such as fresh meat, vegetables, oil and spices–have experienced consistent high demand. Also seeing sustained high demand were baking products like flour, cake mixes and frosting, Oracle’s analysis found.

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This piece originally appeared on Supermarket News, a New Hope Network sister website. Visit the site for more grocery trends and insights.

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