It’s harder to find items on sale at the grocery store
That’s partly because deals normally seen at the grocery store, like two-for-one specials, are getting harder to find.
Food companies that make products like Cheerios cereal, Progresso soups and Duncan Hines cake mix are offering fewer deals on items. Grocery stores, which buy those products in bulk often pass along those discounts to lure consumers into stores.
But food manufacturers and grocery stores are rethinking their pricing strategies now because demand is surging.
“You’re not going to get as good a deal on [grocery] products today as you would have back in February,” said David Driscoll, an analyst covering packaged food at DD Research.
Why too much demand is a problem
“The retail world is ferociously competitive,” Driscoll said. “As a consequence, much of these promotional dollars do get passed on to the consumer.”
All that changed with the coronavirus pandemic, when people began stockpiling grocery items and eating at home more. In the three months ending June 27, grocery sales popped 12.7 percent, according to a recent analyst note from Wells Fargo which used Nielsen data.
Demand was so high, in fact, that one grocery store supplier says it worried about not being able to keep up.
He added that, “we saw retailers pull back on promotion as the focus was on keeping products in stock.” The company plans to resume its normal discounting levels this year.
“This resulted in significantly higher sales of promoted product than historically seen,” he said. But he added that he doesn’t expect those deals to continue in the second half of the year.
In addition to concerns about running out of product, food companies and grocery stores have a good reason to offer fewer deals now: why sell your products at a lower price if you don’t have to?
“Sometimes the person who bought that product would have bought it anyway, so you just cannibalized your market by giving them a discount,” Edris Bemanian, CEO of Engage3, a firm that uses data science to help grocery stores with pricing.
The deals will likely come back, Bemanian said, once grocery stores have to fight for their customers again. Until then, Americans will just have to do without those two-for-one specials.
