American shoppers are sticking with the bulk-buying habits they picked up during the early days of the pandemic as supply chain issues and fears of low levels remain in the marketplace.
The Wall Street Journal reported that sales at bulk chains Costco Wholesale Corp., Walmart Inc.’s Sam’s Club, and BJ’s Wholesale Club Holdings Inc. went up 26.6% in dollars and 18% in volume during 2021’s fourth quarter when contrasted with the same time period in 2019, according to IRI, which keeps track of home product utilization.
IRI found that the “average annual growth in sales by volume of food and beverages was 3% in 2020 and 2021, compared with just 0.5% average annual growth for the prior 10 years,” per the Journal.
Customers are also purchasing bigger product sizes. The “average volume per unit was up 2.1% last year compared with average sizes in 2019, IRI figures show.” IRI projected that consumption will probably go down this year from the previous year, but it reportedly noted that the amounts of household product and food consumption will nevertheless be double the numbers from before the COVID-19 pandemic.
“Even if somebody waves a magic wand and makes Covid go away completely, we still expect elevated consumption in the home because people are accustomed to working from home, and hybrid work is here to stay,” says Krishnakumar Davey, president of client engagement at IRI.
The Omicron variant of COVID-19 also led to item shortages and supply chain issues, potentially intensifying consumers’ desire to increase storage of specific items.
“Psychologically, the cost of underconsumption appears higher than overconsumption,” Ayelet Fishbach, professor of behavioral science and marketing at University of Chicago Booth School of Business, said per the Journal. “We are more upset about not getting our cereal box than having an extra box left over and having to throw it away.”
IRI numbers found that food and drink items overall were 85% in stock for the week ending on January 30th. Pre-pandemic, the stock amounts were 93%-95%. There were deficiencies in areas such as “sports drinks (77% in stock), frozen baked goods (79%) and frozen snacks (81%),” per the Journal.
The change in buying habits and new customers has led some bulk-buying chains to alter their strategies to retain customers.
Sam’s Club’s membership numbers were at a record in 2021’s third quarter, but most of the recent members are millennial families, per Megan Crozier, Sam’s chief merchant. The company decided to alter some of the items it offers, broaden its app capability and create a grocery pickup option.
A recent article published by Nasdaq referenced a survey by Clever which found that 33% of retired Americans have a hard time paying their grocery bills.
Nasdaq provided strategies for retired Americans shopping for groceries, and buying in bulk was one of them. However, the publication noted that the strategy can make matters worse if consumers aren’t careful about what they’re stocking up on.
Appliance companies have taken note of the shift in purchasing, as well.
“Last year, sales of chest freezers in the U.S. more than doubled to 1.714 million units from 768,600 in 2019, according to the Association of Home Appliance Manufacturers. Refrigerator sales rose to 12.8 million units in 2021, up from 11.1 million units in 2019,” the outlet added.
“Consumers who experienced the harsh reality of pandemic shortages made permanent changes,” said Bob Nolan, senior vice president of Demand Science at Conagra Brands Inc., per the Journal. “They didn’t just stock up that week, but they said to themselves, even if subconsciously, ‘That’s not going to happen to me again.’”
“We thought we’d have a lull in demand because people bought so much initially. But the reality is [consumers] have established a new inventory level,” and want more products stored up in their freezers, said Nolan.