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May 19, 2020

Retailers Adapt to Meet Demand for Household Supplies


SN: "Consumers stripped supermarket operators’ shelves bare of many paper products and household cleaning supplies during the first weeks of the COVID-19 pandemic, and retailers and suppliers have been scrambling to keep up with demand ever since. For the eight-week span through April 25, year-over-year sales of all household care items rose 45.6% across U.S. retail channels, according to Nielsen. That included gains of 245.2% for aerosol disinfectants; 229.2% for hand sanitizer; and 145.9% for multipurpose cleaner wet wipes. In addition, sales of bath tissue shot up 78% for that eight-week period, and sales of paper towels rose 64.7%.Driving demand for these items was the combination of consumers’ increased focus on health, as they cleaned and disinfected everything around them more frequently, and a desire to hoard products they feared might be harder to obtain as the virus raced across the country. Samrat Sharma, U.S. CPG lead at consulting firm PwC, said the pandemic will only accelerate the shift of these products to online channels. "These categories are very online-friendly,” he said, citing data showing the pace of online sales growth doubling in 2020. “They were already moving online, and we expect that to continue. These habits are going to stick, post-COVID.” Retailers, meanwhile, have been innovating to keep their physical stores in stock. They have expanded their product sourcing to include new manufacturers, instituted policies to limit purchases and have been taking some logistical shortcuts, such as direct delivery from manufacturers to stores, in order to replenish their shelves as quickly as possible. Regional variations in demand have also led some retailers to transfer inventories to needed areas, and to allow individual store managers to implement buying limits to bolster their in-stock positioning... Walmart said paper products, cleaning supplies and other items have remained in high demand throughout the crisis. “We are working to replenish those items quickly, including diverting products to areas of the country where they are needed most and routing deliveries directly to stores,” said Delia Garcia, senior director of communications at Walmart. The company has also authorized its individual store managers to manage their inventory, including giving them the discretion to limit sales quantities on items that are in unusually high demand. Ben Postma [director of center store merchandising at] SpartanNash, expects supermarket sales of both food and other household supplies to remain strong after the pandemic. “Disinfecting products will continue to be a focus due to consumer desire to kill germs and disinfect, as opposed to just clean,” he said. “Customers in all age brackets are adopting more rigorous cleaning habits, and the lingering effects of the fear of illnesses will remain in consumers’ minds.” In addition, even as stay-at-home orders are lifted around the country, consumers are likely to continue their increased levels of in-store grocery shopping as they may remain fearful of dining out. Many consumers will also be feeling the financial pressures of the weakened economy, which may also constrain their ability to dine out. “The slow transition back to ‘normal’ could lead to fewer trips to the store, but larger basket sizes per trip,” said Postma. “Many consumers have also adapted to ecommerce and curbside pickup to limit exposure to the virus. The appeal of convenience and safety means many will continue purchasing groceries this way.” Among the challenges that have delayed production for some suppliers, for example, has been the difficulty in obtaining some key ingredients. For all CPG goods, suppliers have also coped with challenges around absenteeism in their production facilities, as workers either became ill or were fearful of catching the virus at the workplace. Postma said most suppliers depleted their surplus “safety stock” of inventory during the initial wave of increased demand in March. Most of the company’s cleaning and paper suppliers began running production at their facilities 24/7, and some added new co-packers or rented production locations to increase their supply, he said"...

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