Insight

When luck is not a strategy: 2020 Consumer pulse grocery report

Businesses in the grocery sector have a finite amount of time to acquire consumers and revenue streams from competitors, and then retain them.

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Scott Rankin

US Strategy Service Line Leader, Deal Advisory & Strategy, KPMG LLP

+1 617-988-1474

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Jamil Satchu

Principal, Advisory, Strategy, KPMG US

+1 312-241-0628

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Julia Wilson

Principal, Advisory Strategy and ESG, KPMG US

+1 404-222-3511

During the last three quarters of 2020, COVID-19 has upended life across the US. Its ripple effects on Retail businesses have varied enormously. For the Grocery sector¹, work, school and social habits have produced big shifts in consumer behavior around food shopping and eating, seemingly overnight. As a result, Grocery revenues have surged, as consumers make their homes the center of all activity and retool ideas about household meal planning, shopping and preparation.

When luck is not a strategy

Now businesses in the sector face ‘a higher class of problem’—capitalizing on new consumer behaviors and building capabilities that will help them consolidate gains. Smart c-suites know there is a finite amount of time in which to act before consumer tastes change again, when at a still-unknown future point, social conditions inevitably return to something that more resembles pre-COVID-19 baselines. They’re watching the marketplace for meaningful signals, particularly data-based insight about the underlying drivers of channel preferences and brand loyalty.

We’re watching, too. To deepen our own understanding, KPMG went directly to consumers themselves and surveyed approximately 1,000 of them across the US at the end of October. We conducted our field research—and published this report—to address questions that include:

indication of "stickiness" in the sharp growth in share of meals prepared and eaten at home, and corollary decreases in “food away from home” eating
patterns in brand loyalty and experimentation, as consumers get reacquainted with iconic brands and grocery sector businesses bring new offerings to market
any evidence of "COVID-19 fatigue" in grocery buying and eating behavior, as COVID-19 restrictions enter their eighth month, and consumer appetites for menu experimentation slow
shifts in channel preference, as personal safety and redefined notions of “consumer experience” reshape buying through online, in-store or hybrid channels
the continued resilience of holiday social traditions in the face of lockdowns, as demonstrated in stated menu and travel planning for the Winter holidays.

^{1 For the purposes of this report, KPMG defines the Grocery sector as comprised of all businesses that manufacture, distribute and sell food or beverage products.}

Changes in eating habits

As expected, US consumers are eating at home more, regardless of meal. Between 71 and 77 percent of our respondents reported cooking or preparing meals at home; seven to eight percent report eating out, while 16 to 21 percent said food “to go” or “delivery.”

Differences show up when respondents are sorted by employment location: Those who work at home are less likely to prepare meals at home (63 percent); and more likely to dine out (10 percent), pick up to go (13 percent) and order in for delivery. Across all meals, however, ordering meals for delivery at home or pick-up-to-go food has declined during COVID-19.

Cook / prepare at home

Order delivery

Pick up to-go food

Eat out

^{Note(s): (a) KPMG conducted four surveys of 1,000 consumers across the United States and in all instances they were asked the question, “Please indicate whether you do each of the following activities, less, the same amount, or more than you did prior to COVID-19.” and “Please indicate whether you expect to do each of the following activities less, the same amount, or more when COVID-19 is under control* than you did prior to COVID-19.”}

^{Source(s): (1) KPMG Consumer survey, fielded October 29, 2020 – November 3, 2020}

Online ordering becomes routine. Meal kit use is substantial, and here to stay.

In Grocery, as elsewhere in Retail, hybrid online ordering/at-store pickup or delivery models have become established consumer practice, driven by personal safety concerns. Asked how they receive their grocery items, 33 percent said “delivery;” 28 percent each said either “in-store pickup” or “curbside pickup.”

A quarter of our respondents said they use meal kit services; of these, 17 percent are new to meal kits, and more than two-thirds (67 percent) increased their usage during COVID-19. Perhaps more significant, a third (33 percent) of current meal kit users plan to increase their use after COVID-19 is under control; an additional 39 percent plan to keep use at the same level.

Receiving online grocery orders

Meal kit use expected after COVID-19

^{Note(s): (a) KPMG conducted four surveys of 1,000 consumers across the United States and in all instances they were asked the question, “Do you currently purchase more, the same amount, or less online for each of the following product categories than you did prior to COVID-19?” Each stack represents the number of respondents with non-zero spend, they were also asked, “Do you expect to purchase more, the same amount, or less online for each of the following product categories when COVID-19 is under control* than you did prior to COVID-19?, *When COVID-19 is under-control means when there is a vaccine and / or there are no cases in the country” (b) number of responses is only for those who made purchases online.}

^{Regarding meal kits in the same survey in all instances, they were also asked the question, “Over the last 3 months, has your household been using meal preparation kits? If so, which ones?” and “Has your usage of meal kits increased, remained the same, or decreased during COVID-19?” and “Compared to pre-COVID-19, do you expect to use meal kits less, the same amount, or more after COVID-19 is under control?”}

^{Source(s): (1) KPMG Consumer survey, fielded October 29, 2020 – November 3, 2020}

Winter holiday celebrations

Consumers who said they plan to celebrate their Winter holidays at home increased to 73 percent, from 64 percent before COVID-19. For more than three-quarters of our respondents (77 percent), gatherings for holiday meals will be small—less than ten people. A large majority of those who plan to celebrate at home also plan to prepare their meal entirely at home.

Size of Winter holiday gatherings

Holiday meal preparation

^{Note(s): (a) KPMG conducted four surveys of 1,000 consumers across the United States and in all instances they were asked the question, “Where do you typically spend your winter holiday celebrations?”, “Where do you think that you will have your winter holiday celebrations this year?”, “How large a gathering do you typically host / attend for the winter holidays (pre-COVID-19)?”, “How large a gathering do you expect to host / attend for the 2020 winter holidays?” and “You mentioned that your winter holiday dinner will be at home this year. How will this meal be prepared?”}

^{Source(s): (1) KPMG Consumer survey, fielded October 29, 2020 – November 3, 2020}

The KPMG consumer pulse survey series explores key, emerging themes around consumer behaviors, purchasing patterns and the economy. Each survey asks 1,000 U.S. consumers, representing all demographics, timely questions about upcoming purchases and economic conditions. We conduct the surveys to help our clients understand consumers, uncover the signals of permanent change and create a basis for transforming their businesses to meet customers where they are.