Americans’ shopping habits may be changed for good, and that has broad implications for consumers and a clutch of companies able to tap into the emerging trends, according to one analyst.
As COVID-19 continues to reshape spending patterns, CFRA analyst Arun Sundaram found that the biggest winners have become one-stop shop retailers like Amazon (AMZN), Albertsons (ACI), Kroger (KR) and Walmart (WMT).
Along with a handful of other big brands, those companies are drawing support from restrictions on public life that are forcing many employees to work remotely. Those trends include more eating at home, and buying necessities on the Internet.
“Food-at-home demand should stay permanently elevated versus pre-pandemic levels because of newly formed habits and longterm work-from-home adoption,” Sundaram said in a recent note.
In April food-at-home consumption hit a peak at 70% of total food consumption and is currently still high at 57%. As confirmed cases of COVID-19 see another uptick and work from home orders continue, demand for food-at-home is providing major food retailers and brands with a “favorable near-term outlook,” the analyst added.
Branded packaged food brands are also seen as winners, boosted by the e-commerce boom and more consumers cooking at home. Conagra (CAG), General Mills (GIS), and Kraft Heinz (KHC) are all “attractively valued and will benefit from an increasingly digital and work-from-home environment,” according to Sundaram.
He also called this pivot “a once-in-a-generation opportunity for packaged food companies to gain millions of new consumers.”
Before the pandemic, online grocery sales were projected to grow to 4.3% of total U.S. grocery sales in 2020. Now, online grocery sales are expected to reach over 21% by the end of 2020.
As of right now the U.S. grocery industry is valued at $1 trillion dollars; this means every percentage point equals a $10 billion dollar opportunity, according to Sundaram.
In a recent interview, Michele Romanow Clearbanc’s co-founder and president, told Yahoo Finance recently that web commerce’s explosive sales was akin to a decade’s worth of growth jammed into several months.
However, Sundaram says not every brand in the grocery will come out on top. He noted specialty grocers like Sprouts Farmers Market (SFM) could be hurt due to a limited product assortment.
Brooke DiPalma is a producer, booker and reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma.