April retail sales (KR)
The headline U.S. retail sales growth in April decelerated 80bps to 1.6% YOY. Grocery store retail sales increased 3.7% YOY in April, decelerating from 4.9% in March. It was the slowest growth rate since July 2021. In comparison, food service and drinking places sales increased 9.4% YOY in April, decelerating from 12.5% in March. Gasoline station sales decreased 14.6% YOY in April, falling further from March’s 13% decline. Food disinflation and traffic declines are causing grocery store sales to slow. At the same time the PPI for supermarkets increased 13.1% in April. Grocery stores are seeing costs rise at a much faster rate than their own sales.
More snacking (PEP, HSY, UTZ, MDLZ, CPB, K)
According to Circana, nearly half of U.S. consumers are eating three or more snacks daily, up 8% in the past two years. Snack sales grew 11% to $181B in 2022. Mondelez said millennials and Gen Z consumers eat 10% more snacks daily compared to older generations. The first row of the table below shows the national average for snack consumption. The rows below show how many percentage points can be added to the national average to show how much of each demographic is snacking at each daypart. The WSJ published an article on the growth in snacking on Tuesday highlighting the numerous food companies that are trying to position their products and brands on the trend. Snacking is one of our secular growth themes in consumer staples and there are several companies on our Long list benefiting from the tailwind.
Digital grocery rebounds (KR, WMT)
Online grocery sales increased 0.9% to $8.2B in April according to Brick Meets Click and Mercatus, rebounding from a 7.6% decrease in March. Delivery sales grew 20% YOY, while pickup sales decreased 3%. Ship-to-home sales fell 19%. MAUs increased 11% and AOV increased 5% YOY to drive delivery sales in the month. For pickup, AOV decreased double digits while MAU increased MSD%. Repeat purchase intent over the next month decreased by 530bps to 58% showing falling interest in the future. Digital grocery spend is contracting with modest pressure on the consumer’s budgets. Any steps to improve the profitability of digital would likely result in further declines.
