A Peek Into Pantry Performance During the Week of Prime Day

FMCG and Retail | 07-27-2018

For the past four years, Amazon has held its annual Prime Day, featuring deeply discounted products across the site, in the middle of the summer. This year, these discounts extended into the company’s Prime Pantry section, featuring many traditional fast-moving consumer goods (FMCG) categories, as well as into brick-and-mortar for the first time at Whole Foods stores. To counter Amazon’s discounts, several FMCG retailers across the U.S. launched promotional campaigns throughout the week. Yet, according to Nielsen’s Friday morning data for the week ending July 21, 2018, we haven’t seen this year’s Prime Day sales blitz negatively affect manufacturer’s total brick-and-mortar sales during the same week.

During the week ending July 21, 2018, brick-and-mortar sales across U.S. FMCG reached around $15.1 billion in dollars and 4.8 billion in unit volume. At the same time, overall FMCG sales grew by nearly $276 million, compared to year-over-year growth of just $78 million and $24 million during the weeks of Prime Day 2017 and 2016, respectively. While this week saw positive 2% dollar growth (and flat performance in units at just 0.3%), it does mark the lowest overall sales total we’ve seen in the last 12 weeks. Rest assured, however, that historically this week has been a low point in summer performance over the last three years.

Diving into key categories featured during this year’s Prime Day Pantry deals, brands in these categories have seen mixed sales results at brick and mortar throughout the week. However, outside factors may have had more of an influence than online sales.

PULP PRICES HIT PAPER GOODS

Despite deals online across household cleaners and supplies this week, The Clorox Company and S C Johnson & Son Inc. both saw in-store dollar growth of 3% and 4%, respectively. With that said, Koch Industries Inc. saw nearly 10% dollar declines in paper and plastics this week, where brands such as its Brawny and Quilted Northern paper towels were featured on sale during Amazon’s Prime Day.   

One additional factor hitting the paper goods sector is the cost of pulp on the upswing. And these higher costs could have a significant impact on the prices consumers see for a variety of pulp-based products. In fact, compared to this week last year, average unit prices are up for cotton products within the cosmetics category (+2%), femine care liners (+3%), sanitary pads (+3%), toilet paper (+4%), disposable diapers (+5%) and paper towels (+6%).

THE DOG DAYS OF SUMMER

While dog food might not be a key pantry item for all Americans, it’s a staple for many pet owners. This year, Prime Day featured several canine-focused items on sale. Yet dog food performance is currently being driven by rising prices (+5%). Sales of dog food are up 3% this week, reaching heights of $188 million, while unit volume is down nearly 2% compared to this time last year.

One sector of the dog food market that’s driving huge growth, is variants that claim to be ‘Grain-Free’. In fact, sales of grain-free dog food for the week are up 26% in dollars and 35% in unit volume compared to this time last year. But amid recent investigations by the U.S. Food and Drug Administration (FDA) into potential health concerns linked with certain grain-free ingredients, we’ll continue to monitor impacts to the category’s performance.  

E-commerce’s Uneven Shift

Despite the low sales this week, for many across the FMCG market Amazon’s Prime Day represents the revolutionary shift toward online. While today about 30% of Americans buy groceries online, that number is expected to grow to 70% in less than 10 years, according to the most recent Total Consumer Report.

However, the rise of e-commerce isn’t distributed evenly across FMCG. Approximately, 89% of shoppers have purchased non-food products online previously. Meanwhile, food and beverage sales represent just 13% of the overall dollar volume we’ve seen online in the past year. And consumers are more likely to buy certain categories online than others. One such example is snacks. In fact, two in five (42%) have purchased snacks online before, and that number is poised for growth.

Despite the appeal of buying snacks online, in-store sales for salty and sweet snack categories are on the rise. As of June 30, 2018, annual brick-and-mortar dollar sales for salty snacks reached just over $22 million and unit volume exceeded 8.2 billion, up 3.7% and 2.0% year-over-year, respectively. Additionally, brick-and-mortar dollar sales for sweet snacks climbed 1.9% to reach $4.4 million and unit sales saw a slight lift of 1.2% to hit 1.9 billion during the same period.

Data for this article was made possible by Nielsen Friday morning data delivery, the earliest FMCG market read available. Learn more about Friday morning data delivery.

Tagged:  SHOPPER  |  CPG AND RETAIL  |  SEASONAL  |  NIELSEN FIRST LOOK  |  GROCERY

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