We hosted a live Q&A presentation yesterday. In consumer staples, we were asked about SFM, STZ, and LW. CLICK HERE for replays details (includes video and materials link).
Workers returning to the office (ACI)
The NY Post reported that 40% of Google’s NYC workforce had begun returning to its Manhattan locations. Citigroup now plans to increase its NYC office occupancy to 30% by Oct. 5 from 5%. The Wall Street Journal reported that data from Brivo, a company that provides access-control systems for workplaces, shows that the percentage of office workers entering their workplaces was down 51% in late August, as seen in the following chart. Workers at manufacturing and warehouse locations entering their workplaces were down a third. The return to work varies between cities. In New York City, the percentage of office workers returning to their workplace at the end of August was still down more than 60% while Los Angeles was down about a third. It is worth noting that workers returning to the office has not had a significant impact on grocery sales. It will take more than people returning to work to see the share of food at home, reverting to pre-pandemic levels.
Traffic to California grocers continues to lag (SFM & GO)
Foot traffic into grocery stores continues to be challenged as consumers make fewer trips, as seen in the following chart. Consumers are consolidating their trips and purchasing more each time. At the end of August, foot traffic to grocery stores nationwide was down 12%. It is interesting to note the divergence between California and Florida. Traffic trends in Florida match the country, while California continues to see much lower traffic, a spread that has been consistent for several months. California is the largest market for both Sprouts Farmers Market and Grocery Outlet.
Loblaw resumes charging suppliers for light shipments (L.CN)
Loblaw, Canada’s largest grocer, is reinstating monetary penalties for suppliers, not shipping enough inventory on Oct. 4. In a letter to suppliers sent last week, Loblaw said the timing was right because the food industry has adapted and “seems to have a good handle on managing COVID-19.” The Food, Health, and Consumer Products of Canada, a major trade association, said it was too early to reinstate the fines because manufacturers are still coping with COVID-19. The industry is already fighting Walmart Canada’s recent decision to charge extra fees. The trade association is lobbying the Canadian government to regulate the big grocers’ conduct. Penalties for shipments that are short is a standard industry practice to encourage the delivery of complete orders on time. Loblaw had stopped the penalties between March and May, but from June to September, it began charging fees for light shipments unless demand spikes significantly outpaced forecasts. The Chief Administrative Officer at Kraft Heinz Canada said, “Increases in fines and penalties, as we try to address all of the demand of food, of course, diverts our time and energy from producing as much food as possible as we focus on ensuring our customers are happy.” Loblaw is on our short bias list.
