The Impact of COVID-19: Insights and Takeaways from the State of the Specialty Food Industry Report

The SFA’s newly released State of the Specialty Food Industry report, 2021-2022 edition, digs into a business environment still adjusting to and recovering from the pandemic’s impact. Following are four insights and takeaways from this year’s research.
 
1.    Center store rebirth. COVID recalibrated several grocery categories. Some are forecast to grow more than they would have otherwise, and some have new life after being stalled for years. A year of home cooking has led to consumers rediscovering the usefulness and necessity of a home pantry. While cooking-at-home habits will eventually strike a balance with dining out as more foodservice opens, at-home cooks are now more resourceful, willing to experiment, and enjoying (some of) what the pandemic forced them to learn. 
2.    Improving discovery. Online meetings have been solving an immediate need for retail buyers and makers, and this has proved to be a more efficient way of getting business done that will become a fixture going forward. However, buyers and makers acknowledge that it comes at the cost of hurting new product discovery. Combined with limited in-store sampling, fewer demos, and the decimation of foodservice, 2020 was a rough year for innovation discovery. This will be one of the key issues for the specialty industry in 2021 and beyond.    
3.    Specialty’s ecommerce visibility issue. Related to diminishing discovery, specialty is facing challenges with the growth of online shopping as it allows fewer opportunities for impulse buys.  Industry data shows nearly two-thirds (62 percent) of consumers say they miss finding items not on their list when shopping online. In fact, impulse sales account for 20 percent of in-store purchases, meaning 2020 was likely a year of “safe bets” with essentials and known brands from a consumer purchase standpoint in ecommerce. Rising ecommerce retailers such as Thrive Market, Hive, and Good Eggs are addressing the visibility issue by working harder at showcasing specialty. 
4.    Channel shifting. Almost every online e-grocery market saw phenomenal growth in 2020, while drug stores gained new customers by adding grab-and-go and refrigerated aisles. Dollar stores continued pulling people from all other channels, and in 2021 are projected to account for 50 percent of all newly opened stores. Consumers shopped in stores for groceries that they may have rarely visited much in prior years. Most pronounced through spring and into summer of 2020 because shoppers were desperate to try to find everything from toilet paper to commodity foods, this channel shifting led them to discover that some of these channels and chains were good enough that they would visit again. Expect a behavioral shift to continue for the foreseeable future. 

You can learn more about market growth, fluctuations, and drivers, as well 10-year category tracking and forecasts by purchasing the State of the Specialty Food Industry, 2021-2022 Edition. 

And weigh in on what you think the new post-pandemic industry norms will be in our discussion in the Community Hub.