A second wave for grocery (KR)
Several states are implementing new restrictions on businesses, including restaurants, bars, schools, and even family gatherings. Simultaneously, the results from Moderna’s late-stage trial are expected to be released very soon. Expectations are high after Pfizer said its vaccine was 90% effective. Grocery sales will benefit from less food away from home consumption, but the gains will likely be modest. Restaurant sales have been improving since the lows in April, but grocery sales have remained relatively steady, especially in conventional grocers. Fresh produce sales, which are a good indicator of at-home meal consumption, have remained steady, as seen in the following chart. So a resurgence in grocery sales shouldn’t be expected beyond some stockpiling.
Another stockpiling (ACI)
A resurgence in grocery sales should not be expected beyond buying ahead of demand or some stockpiling. The number of articles saying that the supply chain is in good shape and out of stocks is not expected, most likely means there will be an increase in stockpiles. Consumers never stopped buying ahead of demand during the pandemic; it has just been at a much lower level than in March. According to an October report from Sports and Leisure Research Group, roughly 52% of Americans plan to stockpile this fall. Kroger, Giant, H-E-B, and Publix put limits on certain items, including toilet paper and paper towels, last week. Albertsons placed limits regionally. Harris Teeter put limits on cleaning products. According to IRI, weekly stock availability has been improving for most categories over the last ten weeks. The meat department has seen only a modest worsening in availability from 87% in early October to 86% last week, compared to 90% availability pre-pandemic. In comparison, paper product availability was much worse, at 81% in the first week of November.
New restaurant restrictions (SYY)
Unlike the restrictions when the pandemic began, several states allowed restaurants and bars to stay open with some new limits. New York, for example, is allowing indoor dining until 10 PM. Connecticut, Massachusetts, Minnesota, New Jersey, Virginia, and Vermont are implementing similar restrictions. Other states are limiting indoor dining capacity further or only allowing to-go sales. Restaurant sales were already rolling over with the impact of colder weather on outdoor dining. According to Toast, a POS provider, restaurant sales were down 30% YOY at restaurants in its network during the second week of November, as seen in the chart below. The earlier closing time likely impacts alcohol sales more than food sales.
