As 2020 — a year that will go down in history as one of the toughest for the retail industry due to the global significance of COVID-19 — nears its end, some product and shopping trends impacting the private label and store brands segments are expected to bleed into 2021 and beyond.
One of those trends is a continued increase in supply of such pandemic-related products as hand sanitizer, disinfectants, OTC medicines and personal protective equipment like face masks. However, as a result of shoppers buying in bulk and panic shopping, some products that may not seem like a “pandemic product,” per se, saw unprecedented levels of growth worth noting, too. Products like meats, alternative meats and even oat milk (both branded and store brand offerings) sold at unprecedented levels and continue to do so heading into the new year.
According to Nielsen figures, shared with Store Brands, sales of pandemic products from January into late October skyrocketed during the first round of COVID-19. It’s a reflection of just how turbulent 2020 has been.
And no category saw a bigger impact than hand sanitizers. For the 34 weeks ended Oct. 24, hand sanitizer sales were up nearly 700% compared with a year ago. In the May and June months, early pandemic, hand sanitizer sales were up 1,280% and 1,339%, respectively, dipping down to a 986% increase in July. Total sales for the 34 weeks were well over $1 billion.
With numbers like those, product supply was clearly an issue in stores and some retailers even began carrying new own brand hand sanitizer to keep up with demand. Delivery service Instacart developed its own brand of hand sanitizer to help keep its staff safe. Additionally, some manufacturers not normally producing sanitizer began developing it for private label, including regional food and alcohol supplier LiDestri Food and Drink, based in Fairport, N.Y. Producers in the category such as Clenova, headquartered in Troy, Mich., upped production lines of hand soaps and hand sanitizers to 160 million uses a week.
And then there were companies like Perrigo that produced hand sanitizer products to help keep hospital staff and front-line workers safe. “Given our close ties in the communities where we live and work, we became aware of a hand sanitizer shortage at local area hospitals,” said Murray Kessler, president and CEO of Perrigo. “Our team in New York sprang into action and developed a formula, quickly scaled production, and donated 1 million bottles of hand sanitizer within an extraordinarily compressed timeframe to local hospitals and first responders.”
“For the rest of 2020 and heading into 2021, we remain focused on improving our service levels and continuing to fully replenish our U.S. supply chain,” Perrigo’s Kessler said. “Some raw materials continue to see high demand and we are working hard to return Perrigo and retailer inventories to normalized levels. We remain confident that Perrigo is well-positioned to capitalize in the ‘new normal world’ where self-care, value and e-commerce are more important than ever before.”
Maute echoed the increase in e-commerce sales going forward, while Kopitke of Amazon Business stressed how sellers over e-commerce should be looked at as a way to support the supply chain. “For e-commerce stores, they should stay on the pulse of scarce supply and backorder needs to be a ready consistent source for customers unsatisfied with traditional channels,” he said.
“The impact technology will have on the procurement process will only be more pervasive in 2021. Selling supplies through an online store provides suppliers with more direct access to thousands of new customers, streamlined purchasing processes and analytics into buying patterns that can help determine inventory needs,” Kopitke said. “These features have allowed many PPE manufacturers to respond to record-high spikes in demand and supply issues. There will be both small and big opportunities alike in the future for suppliers.”
Maute said retailers and manufacturers will embark on a brand- and SKU-rationalization process to ensure that they can meet consumer demand going forward. “The distinction between need-to-have and nice-to-have will prevail,” he noted.
As for product trends adding to those directly impacted by the pandemic, Maute said to look at meal-kit solutions, as cooking from home has increased as an overall consumer behavior.
Indeed, retailers like Giant launched a new meal-kit called Cook-in-Bag, and Albertsons expanded its free-from own brand Open Nature’s meal-kit offering with a dozen new meals called Open Nature Savory Skillet Meals. ShopRite has begun piloting a complete meal-solutions concept shop in select stores that includes delivery of meals and a focus on its store brand products. Kroger has been strengthening its Home Chef meal-kit solution, too.
It’s an example of retailers innovating to meet shopper needs around the pandemic, and how they innovate with private brands will need to continue, too, helping consumers adjust to life in “the new normal,” as often referred to above.
“Store brand sales grew significantly over the past year and so did online shopping,” Maute said. “Retailers will continue to scurry to make sure their e-commerce chops are up to the ‘new normal.’ They will need to continue to manage high demand for the foreseeable future.”