Bulletin
Investor Alert

April 16, 2020, 4:05 p.m. EDT

Shopping in a pandemic: Gluten-free pizza looks more tempting when the supermarket shelves are bare

Data shows consumers are trying new brands and new foods as grocers struggle to keep shelves stocked

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    Tyson Foods Inc. Cl A (TSN)
  • X
    Consumer Staples Select Sector SPDR ETF (XLP)
  • X
    S&P 500 Index (SPX)

or Cancel Already have a watchlist? Log In

By Tonya Garcia, MarketWatch


Harry Brelsford
Empty shelves at retailers big and small has got shoppers trying new items, experts say

Coronavirus-related grocery shopping is clearing shelves at retailers across the country, giving consumers a chance to taste-test items they may not have wanted to try before, experts say.

Symphony RetailAI, a marketing, merchandising and supply-chain solutions platform, said that with high demand for frozen pizza leading to products being “out-of-stock,” customers are trying gluten-free varieties.

“One of the impacts of the coronavirus pandemic on grocery and categories is that customers are expanding their purchases well beyond their normal choices,” said Kevin Sterneckert, chief marketing officer at Symphony RetailAI.

Read: Traffic at Walmart, Costco and Target falls for the first time in weeks as coronavirus stockpiling behavior shifts

“Retailers may regard gluten-free pizza as a specialty item with a very prescribed purchase volume, but now, customers are happy to have any pizza if they can’t have their first choice. Customers are trying new items and brands with characteristics that they wouldn’t have tried prior to the COVID crisis, and this will likely continue in the future, as customers become exposed to new products.”

Customers are even more willing to make their own pizzas at home, with Dean Banks, president of Tyson Foods Inc. /zigman2/quotes/201117502/composite TSN +4.01% , telling MarketWatch that packs of pepperoni are a popular item to use as a topping.

Data from Symphony RetailAI shows that basket size has expanded more than 60% during the COVID-19 outbreak as families stay home to meet social-distancing guidelines.

And data provided by AlixPartners shows that 65% of consumers have tried a new national or private-label brand amid “shelter-in-place” orders. Nearly four out of five (79%) did so because an item was out of stock.

Sources with whom MarketWatch has spoken say there’s no shortage of food in the U.S. Still, even major retailers are struggling to keep their shelves stocked.

The Consumer Staples Select Sector SPDR ETF /zigman2/quotes/200697959/composite XLP +0.53%  has climbed 5.7% over the past year as the S&P 500 index /zigman2/quotes/210599714/realtime SPX +1.60%  has fallen 3.7% and the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +1.34%  has tumbled 11%.

“You’ve handled unbelievable surges in demand which have quickly been followed by out of stocks,” said Walmart Inc. /zigman2/quotes/207374728/composite WMT +0.42%  Chief Executive Doug McMillon in a letter to U.S.-based store associates posted to the company website, thanking them for their work.

The situation is such that McMillon asked shoppers to take a different approach to their grocery shopping lists during an appearance on the “ Today ” show.

“So there’s plenty of flow coming, but if everyone could just kind of manage and buy week to week rather than stocking up at this point it would be helpful for everybody,” he said.

See: Grocery prices are rising at eat-at-home demand soars during the coronavirus pandemic

Consumers are “being creative about putting food on the table,” said David Fisch, general manager with the rewards app Shopkick.

Through focus groups and other interactions with consumers, Shopkick is finding an open-minded shopper who is willing to try new things and possibly even add these items to the regular rotation going forward.

In addition to gluten-free pizza, organic and other specialty eggs could get a trial run as egg shelves clear at the grocer.

Specialty eggs tend to be more expensive than those procured from a factory farm. However, much like the “lipstick effect” allows for the purchase of budget-conscious luxuries like high-end makeup when more expensive luxuries aren’t possible, Jesse Laflamme, chief executive of specialty egg producer Pete & Gerry’s Organic Eggs, says there’s something of an “egg effect.” Customers will try a pricier, higher quality product to eat at home when the luxury of a restaurant is out of the question.

Read: Ulta will benefit from the ‘lipstick effect’ even if no one is wearing makeup while social distancing

“We’re actually seeing more trials,” he said. “That’s driven by what’s left on the shelf. It’s forcing people to try a lot more products versus what they were trying before.”

Even if eggs and other items are a bit “recession proof,” as the economy sinks and millions of Americans find themselves out of work, some customers are swapping some pricier items for generic, according to Shopkick’s Fisch.

“There’s been a massive impact on the economy and some are looking to trim down their budgets,” he said. “Same with rewards apps. More people are redeeming through our app and using it as a money-saving opportunity until they can find a new job.”

/zigman2/quotes/201117502/composite
US : U.S.: NYSE
$ 59.18
+2.28 +4.01%
Volume: 2.64M
Sept. 25, 2020 4:00p
P/E Ratio
12.08
Dividend Yield
2.84%
Market Cap
$21.14 billion
Rev. per Employee
$330,628
loading...
/zigman2/quotes/200697959/composite
US : U.S.: NYSE Arca
$ 63.04
+0.33 +0.53%
Volume: 7.43M
Sept. 25, 2020 4:00p
loading...
/zigman2/quotes/210599714/realtime
US : S&P US
3,298.46
+51.87 +1.60%
Volume: 2.18B
Sept. 25, 2020 5:06p
loading...
/zigman2/quotes/210598065/realtime
US : Dow Jones Global
27,173.96
+358.52 +1.34%
Volume: 391.73M
Sept. 25, 2020 5:06p
loading...
/zigman2/quotes/207374728/composite
US : U.S.: NYSE
$ 137.27
+0.57 +0.42%
Volume: 7.54M
Sept. 25, 2020 4:00p
P/E Ratio
21.88
Dividend Yield
1.57%
Market Cap
$388.99 billion
Rev. per Employee
$223,654
loading...

Tonya Garcia is a MarketWatch reporter covering retail and consumer-oriented companies. You can follow her on Twitter @tgarcianyc. She is based in New York.

This Story has 0 Comments
Be the first to comment
More News In
Industries

Story Conversation

Commenting FAQs »
Link to MarketWatch's Slice.