The Impact of COVID-19: Insights and Takeaways
Improving discovery. Online meetings have been solving an immediate need for retail buyers
and makers, and this has proved to be a more ecient 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.
Plant-based competition. The plant-based specialty food and beverage market grew 42 percent,
nearly twice as fast as the entire specialty market. Much of the growth occurred in 2020 when
surge shopping served as a gateway in some categories. But the plant-based sector is shifting as
big CPG players innovate in the specialty space, with massive funding and scale, and non-special-
ty ingredients. This is especially true with plant-based meat alternatives (refrigerated), which lost
more sales share in specialty than any other category, dropping nearly 12 points.
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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.
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 neces-
sity 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.
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 grocer-
ies 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 behav-
ioral shift to continue for the foreseeable future.
1.
2.
3.
4.
5.
Consumers who say
they miss finding items
not on their list when
shopping online.
D O L L A R
G R O C E R Y
M I N I M A R T
62%
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