Below is a brief excerpt from a complementary research note written by our Consumer Staples analysts Howard Penney and Daniel Biolsi. We are pleased to announce our new Sector Pro Product Consumables Pro. Click HERE to learn more.
Regionals Outpaced National Chains
Taking stock of the Q2 reports for the grocers, there was 1) not a lot of variance among the companies in the post-stockpiling period, 2) some regional grocers outperformed the national chains, 3) even after making adjustments Whole Foods lagged.
- Weis Markets, a mid-Atlantic regional grocer, reported a 24.1% SSS increase in Q2. The company doubled net income, with a 23.7% increase in sales.
- Ingles Markets, a regional grocer with roughly 200 stores in six southeast states, reported a 12% sales increase in Q2 driven by a 23.1% SSS increase. Grocery sales grew 28%, non-foods grew 18%, perishables grew 22%, while gasoline fell 54%. Gross margins expanded 290bps due to lower promotions. Net income grew 167%, with a 12% increase in sales.
In comparison, Amazon reported brick and mortar stores (which is predominantly Whole Foods) had a 13% sales decrease. It’s important to note that online orders are excluded from brick and mortar sales.
Grocery Spending Driven By Accelerating Basket Size
In the most recent four weeks, trips to the grocery store to purchase consumer packaged goods, edible categories, and general food have been even with pre-pandemic levels. Non-edible shopping trips have been up about 3% over the same time period.
The growth in grocery spending has been driven by larger basket sizes. In the week ended July 19, basket size increased 15% YOY in CPG and general food, while the edible category increased 18%, and the non-edible category increased 8%.
The basket size has accelerated 3% since the week ended June 28. The following charts show the general steadiness in traffic trends in comparison to the basket size.