Dive Brief:

• Sales in the grocery industry fell 1.6% in June compared to the month prior as consumers became less reliant on grocers for meals and home goods, according to estimated data released Thursday by the U.S. Census Bureau. The sector declined even as overall retail sales notched a 7.5% increase for the month.
• Grocery spending remained elevated on a year-over-year basis in June, with the industry posting a sales gain of 11.7% over June 2019 as consumers remained heavily reliant on supermarkets amid the COVID-19 pandemic.
• Sales of frozen food were especially strong as June came to a close. Excluding poultry, sales in the frozen category were up nearly 21% during the week that ended June 28 compared with the same period in 2019, according to data provided by 210 Analytics and IRI. The increase marked the 16th straight week that frozen food sales have posted a double-digit sales gain.

Dive Insight:

Grocery sales have been soaring during the pandemic, but the rate of increase is down considerably from their peak in March, when the coronavirus outbreak upended shopping habits and supermarkets were thrust into the spotlight. The industry was a lone bright spot that month, rocketing ahead even as retail sales fell sharply across the board.

While monthly spending on groceries was off in June, virtually every other retail sector saw sales increase during the month, a reflection of the widening options consumers had as jurisdictions across the country let businesses resume operating.

Clothing stores led the way, with sales more than doubling last month even as they remained down over May 2019 by nearly a quarter. Electronics, appliance and furniture retailers also recorded stellar sales gains in June.

Notably, restaurant sales rose 20% in June compared with May, indicating that as people are able to eat out again, they can be expected to spend less at supermarkets. With authorities in states like California, Florida and Texas reimposing restrictions on restaurants as COVID-19 cases head back up, grocers could again see sales rise as people increase their dependence on supermarkets.

Grocers are still enjoying sales that are not only outpacing the levels they saw last year but also substantially outpacing the retail portion of the economy as a whole. Grocery spending was up 11.7% in June compared with June 2019, while overall retail spending eked out a gain of just 1.1% over that same time frame.

Sales data and insights from 210 Analytics and IRI suggest that as they look ahead, grocers should focus on items that broaden horizons for shoppers no longer interested in loading up on pantry staples. “IRI’s weekly survey found that consumers, who were initially preparing more from-scratch meals, are running out of meal ideas and craving variety and convenience,” Anne-Marie Roerink, president of 210 Analytics, wrote in a research note. “Pre-pandemic, it was exactly this meal fatigue that drove consumers to eat out."