Consumers are starting to return to pre-pandemic spending patterns, but it will take time to arrive at a new normal.
That’s how consumer insights leader Todd Hale launched into his latest update and outlook webinar for Members of the American Bakers Association — his third one since the pandemic began.
Hale, who is principal, Todd Hale, LLC, relayed his perspectives about consumer spending, baking, retail and restaurants.
“Things are getting better,” he said. “We’ll see some unusual flips in trends as restaurants start growing again.”
FORECAST FOR CONSUMER SPENDING
Hale relayed his outlook on how food trends will play out across different selling channels.
Among his key points:
- Brick and mortar will still command the biggest share of food retail sales, but e-commerce will capture the majority of growth.
- At-home food demand will fall in the upcoming months as schools, businesses, restaurants, and sports/entertainment venues get back to some level of normalcy. However, spending will still be ahead of the pre-pandemic period.
- Restaurant foodservice challenges will remain despite a return to growth. Results will be well ahead of 2020 levels but below 2019.
BAKED GOODS MAKE PROGRESS
While commercial baked goods sales at retail were off in the first quarter from the remarkable growth of the year-ago period, they were still mostly ahead of the same period in 2019, said Hale, basing his insights on data from NielsenIQ Consumer LLC. A case in point is sandwich bread, which surged 11.6% in retail sales during last year’s first quarter but dropped 6.6% in the same period this year. However, sales were up 4.2% this year when measured against 2019.
FRESH BAKERY REPRESENTS “MIXED BAG”
The fresh bakery segment was hard-hit in 2020 as consumers gravitated to packaged goods and retailers de-emphasized self-service departments. The industry will need more time to work through these challenges.
First-quarter 2021 dollar sales were mixed in fresh bakery, with categories such as cakes (+10.3%) and croissants (+16.3%) staging comebacks from last year but others like donuts (-7.4%) falling short, according to the NielsenIQ data. There was even a mixed picture when comparing 2021 results to 2019.
“There’s still a lot to do to get back to normal in the bakery department,” Hale said.
AT-HOME BAKING STILL DELIVERS
The 2020 surge in consumer demand for at-home baking staples and mixes fell off somewhat in this year’s first quarter — but still showed strength when compared to 2019. In that latter comparison, baking staples were up 18.7% in dollar sales and baking mixes were ahead 16.3%.
“There’s still demand for getting the family involved in baking at home,” Hale said.
RESTAURANT OUTLOOK BRIGHTENS
Better days are ahead for the hard-hit restaurant sector. Hale noted that the National Restaurant Association has projected foodservice sales will increase 11% in 2021 to $731 billion, after falling 24% in 2020 to $659 billion, according to a Restaurant Dive article.
Meanwhile, NielsenIQ data indicates some 28% of households expect to visit restaurants and bars more this summer than in 2020, he added. This compares to 17% of households stating they will buy more groceries in a physical store this summer versus last and just 11% planning to buy more groceries online this summer.
RETAILERS AND RESTAURANTS INNOVATE
With the economy opening up, retailers and restaurants are hoping to benefit from innovation strategies unveiled during the pandemic, Hale said.
“We’ve never seen anything like last year, not just in sales trends, but also in how restaurants and retailers were trying to innovate themselves back into growth,” he elaborated.
Innovation efforts have included bigger investments in pickup and delivery, mobile ordering and ghost kitchens — and an emphasis on food halls by some retailers.
NEXT STEPS FOR THE BAKING INDUSTRY
Hale urged baking leaders to focus on in-store and ecommerce strategies, and invest in digital and traditional marketing platforms. He also emphasized the need to be aware of inflationary pressures that could impact sales.
The industry should build on strategies that support home-based consumption, he added.
“How are you investing to keep at-home demand high for bread and baked goods?” he asked.