Online food prices have risen 4.2% in the past six months according to the latest data from Adobe Inc. as grocery e-commerce accelerated amid the COVID-19 pandemic and producers of Foods struggled to keep up with continued high demand.
“We have always thought that the online market is a ‘value market’ for consumers, which means that consumers can get a little more out of their investment, and it is supposed to be a more favorable time of year for them in terms pricing, “said Vivek Pandya, digital information manager at Adobe. “But they are not getting that relief.”
Grocery prices tend to rise in the second half of the year as the holidays progress, Adobe ADBE,
wrote on his blog. But the rise in food prices was a bit extreme compared to the latest consumer inflation data.
Online grocery sales in the US increased 9% month-over-month in June, reaching $ 7.2 billion, according to the Brick Meets Click / Mercatus Grocery Survey.
That survey found that the increase in sales in June corresponded to greater concern about contracting coronavirus and as more food retailers offered the option of picking up the supermarket after placing an order online.
See:The meat industry will completely disappear in 15 years, says the CEO of Impossible Foods
“This increase in online shopping capacity has changed the equation,” said David Bishop, partner and research leader at Brick Meets Click. “Today, as shoppers have more options, increased capacity now enables continued growth of the online supermarket.”
The number of coronavirus cases in the US reached 3.3 million and Florida recorded a record of more than 15,000 new cases on Sunday. The death toll in the United States is more than 135,000. Some state lawmakers and public health officials have asked for orders to stay home as the number of cases increases.
Overall, Adobe found that e-commerce spending was $ 77 billion higher than expected, while inflation has pushed digital purchasing power (DPP) into negative territory for the first time, “meaning that consumers they can now buy products online for $ 1.01 that would have cost $ 1.00 in June 2019, “said Adobe.
The SPDR S&P Retail ETF XRT,
down 6.3% for the year to date. The Invesco Dynamic Food and Beverage ETF PBJ,
is under %. And the S&P 500 SPX index,
It has fallen 2.3% in the period.
“Online grocery orders for delivery or curbside pickup have grown significantly and we expect online penetration to grow structurally,” Fitch Ratings wrote in a report on the global corporate recovery from the coronavirus.
Read:Grocery prices are rising as demand for eating at home soars during the pandemic
“Some weaker regional companies with limited investment capacity may be unable to support solid omnichannel models and will lose participation in better capitalized companies.”
Adobe notes that the size of the grocery cart has decreased due to a decrease in storage and rising prices of online groceries after shooting up 33% in mid-February.
Even if shoppers are no longer carrying a pantry, food manufacturers have discussed the fight to keep up with demand.
Campbell Soup Co. CPB,
He addressed what he is seeing in consumer demand as the pandemic in the United States progresses in his June third-quarter earnings call.
For example, the company said it saw a 140% increase in demand for ready-to-eat soup, which had a significant impact on manufacturing, Chief Executive Officer Mark Clouse said. There has also been a surge in cooking from scratch, with Clouse saying that the risotto made from tomato soup is a “very, very high-demand recipe.” And customers are testing new products, which hopefully are accompanied by a positive response.
“So the other job we need to do right now is to really understand that optimal assortment and make sure that inventory remains balanced with the source of demand, that we are selective and thoughtful about what that assortment will look like. , while leading to innovation that we still believe will be important, “Clouse said, according to a FactSet transcript.
See:We have a lot of food, so why are grocery store shelves so empty?
Clouse says customers may not see the same number of promotions in the future, something other food producers, such as Conagra Brands Inc. CAG,
noticed also.
Too:Meat shortages loom when coronavirus closes packing plants, leaving farmers with difficult decisions
Conagra, in its June 30 call, highlighted the “strong demand” for frozen vegetables.
“Given the incredible increase in demand we experienced during the fourth quarter and our number one brand position, we have reached a limit on capacity,” said Sean Connolly, CEO of Conagra, according to a FactSet transcript.
Despite the challenges, shoppers don’t have to worry about the widespread lack of food.
“There is limited supply chain risk in this sector, aside from some shortages (such as beef) in key food categories,” Fitch Ratings said.
.
