DoorDash delivering groceries (DASH)
DoorDash is expected to go public this week. Several months ago the company announced that customers could order groceries through its app from Smart & Final, Meijer, Fresh Thyme, Hy-Vee, Gristedes, and D’Agnostino. DoorDash has a wider number of grocery partners it ships prepared meals from. A number of grocery stores were already a part of the DoorDash Drive program, a white-label service where DoorDash handles last mile delivery. Grocery delivery was called a “natural extension.” DoorDash also promises to deliver within an hour of a customer’s order. Shoppers are hired from a staffing agency and handle the shopping in each store with the groceries delivered by Dashers. This gives Dashers more orders outside typical meal times. It is likely that DoorDash expands further with grocery distribution setting up for more competition in the future.
Grocers in the California Bay area have been ordered to reduce capacity to 20% from 50%. Many grocers had been operating below mandated limits. Online grocery sales are expected to accelerate with the new capacity limits. In lower income areas with lower online grocery sales penetration the lower capacity limits are creating lines outside the store again.
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Consumers polled will switch grocery brands to save (GO)
In a survey by Inmar of 1,000 consumers in November 61% reported switching to less expensive brands during the pandemic. Over 70% of respondents said they have actively searched for new types of grocery products or brand and 83% want to purchase these new products again. 67% of grocery customers cited cost and 51% cited sales and coupons as the chief reasons they purchased the new items. “COVID-19 continues to impact today’s shoppers, who are searching for new ways to save money, especially in terms of groceries,” according to David Mounts, CEO of Inmar, a technology services provider for retailers and manufacturers. Additional findings are in the chart below.
Consumers have not shown a significant shift to save on groceries so far during the pandemic. There are many elements of the pandemic that create different consumer spending conditions than other downturns. Grocery Outlet is a food retailer that offers consumers some of the best savings. In past recessions the company has seen the largest sales increases in the sector. Vaccine availability and a still challenged spending environment would be the environment that Grocery Outlet would outperform the most in.
Individual restaurants re-opening hasn’t improved in months (SYY)
The number of employees working and the hours worked has been closely tracking the number of businesses that are open since the middle of June according to Homebase. Homebase is a scheduling-software company whose 60,000 clients are primarily restaurant, food & beverage, retail and services businesses that are largely individually owned/operated. Earlier in the pandemic employee headcount and hours were worked were significantly curtailed as seen in the chart below.
