Households spent an additional €2bn on groceries since Covid

While lockdowns reduced our ability to spend this past year, the average Irish household grocery bill has increased by €1,000

ALL that time at home over successive lockdowns reduced our spending on certain items, such as petrol and entertainment, but one expenditure increased dramatically: Groceries.

Consultants Kantar, who track retail trends, say that those extra meals and snacks at home added €2bn to take-home grocery costs. This includes an additional €7.6m on tea and €19.5m on instant coffee. The average household grocery bill has increased by €1,000 this year.

Not all categories of grocery spending have risen. Since we weren’t leaving the house, we weren’t grooming as much. Sales of shampoo fell 0.8% and of conditioner 2.7% in the 12 weeks to March 8. Sales of deodorant fell 5.4%.

Of course, liquid soap continues to be an exception: Sales were up 99.5%.

We can thank staying at home — to limit the spread of the virus — for a steep decline in sales of cold-and-flu remedies. Cold treatments dropped by 55%, cough liquids by 60%, and lozenges 42%.

Emer Healy, of Kantar, says that we spent an additional €3.2m on boxed chocolates in the 12 weeks to March 8 — a period that includes St Valentine’s Day. 

Sales of flour, eggs, and syrup grew by 56%, 21%, and 14%, respectively, as pancake Tuesday provided entertainment for all ages.

“Online grocery sales had another record-breaking month,” Ms Healy says, “as shoppers ordered €63m worth of take-home groceries, accounting for 6.3% of all sales. 

"Online’s share of the grocery market has had an extraordinary uplift, compared with the pre-pandemic level of 2.7%. 

"Lockdown may well have converted some previously reluctant digital customers long term. 241,500 people made an order in February, compared with 114,800 last year. They are also using services more often, completing 21.7% more digital orders a month.”

Ms Healy anticipates that the phased reopening of schools, in March will show a knock-on impact on the weekly shop. The return of the hospitality sector over the next weeks and months will also make a difference.

“We’ll see more typical sales patterns re-emerge and we’ll need to keep an eye on other metrics of performance to gauge how retailers are moving out of lockdown, including market share figures,” Ms Healy says.

SuperValu remains the most popular retailer in the country. Its sales rose by 20.9% over that same 12- week period, to hold a 22.3% share of the market — an increase of 0.9%. It was the only retailer to attract new shoppers, and its customers traded up, spending €70m more on branded goods than this time last year.

Dunnes increased its sales by 9.7%, as its customers picked up extra items in-store and spent more per buyer than at any other retailer: €618.60. In all, Dunnes shoppers spent an additional €62.5m over the 12 weeks.

With a growth rate of 21.8% over the period, Lidl continues to be the fastest-growing retailer. Aldi customers, meanwhile, spent an additional €57.1m this period, driving 13.4% growth.

Tesco shoppers added an additional 3.6 items to their baskets during this period, more than customers at any other retailer, helping the grocer’s overall sales to rise by 18.0%.

Online boost

Online grocery sales have been the big winner. 

A recent study from Bord Bia shows that in the three years since 2017, online shopping has grown by 75%. In the next three years, to 2023, the agency expects it to grow by a further 55%.

“Covid-19 has led to a profound shift in the adoption of online grocery shopping,” says the report, ”and is continuing to grow, as physical-distancing restrictions remain in place. 

Some 34% of Irish consumers who bought their groceries online in 2020 were ‘first-timers’, while 33% of EU online grocery shoppers only started in the past six months.

"The report also showed that whilst groceries traditionally trail other categories in transitioning to online, it is now the fastest-growing category.”

The big question is whether or not those who migrated to online grocery buying during the past year will now return to the store or will continue to rely on home delivery or click-and-collect.

The Bord Bia report notes that many of us are not happy buying all of our food online. While approximately 94% of the population eat meat/seafood, only 56% report buying meat and/or seafood on the internet.

Why? Freshness, quality, and being able to see the product itself are key barriers here.

“Key to overcoming this,” the report suggests, “is to make the online experience as multi-sensory as possible and bringing the shopping experience to life through the use of high-quality and close-up visuals of raw and cooked food. The integration of butcher and fish monger advice, photos, and videos brings consumers ‘closer’ to the retail experience and would also help inspire confidence.”

Close-ups of meat? Will that be enough to encourage us to buy more fresh produce online?

A general migration to online seems unlikely. International data suggests that while we’ve seen a sharp rise in online grocery shopping around the world, no one is quite ready to abandon the bricks-and-mortar store just yet.

A survey of 8,000 shoppers, by US analysts PowerReviews, found that 93% of consumers had made an in-store grocery purchase within the most recent three months, while 95% of consumers who shopped for groceries online have also made an in-store grocery purchase within the same time period.

Andrew Smith, of PowerReviews, says that although consumer shopping behaviours have shifted online over the past year at an unprecedented rate, grocery was one area where consumers always seemed to place more value on the store over online.

“Our results show this is still the case, to a certain extent, but shoppers are clearly more comfortable doing their grocery shopping online today than pre-Covid,” Mr Smith says.

“The fact that consumer convenience is the biggest reason for this is indicative that this trend will continue long after the pandemic is behind us.”