Pardon the Disruption: 2021 will be a critical year for supermarkets

In a year full of changes, one of the most surprising might be the fact that 2020 was the year the dinosaurs roared back to life. 

I’m talking about traditional supermarkets. Prior to the onset of a global health crisis, these giants were scrambling to hold on to customer dollars that were slowly leaking away to other food retail formats and to fast-evolving restaurant operators. During the pandemic, those same qualities that had started to wear on consumers — the wide aisles, the overwhelming assortments packed with staple products — suddenly became major assets for a nation looking to load up and hunker down.

In hindsight, this probably wasn’t so surprising. Supermarkets have always benefited during natural disasters, and 2020 has essentially been one prolonged natural disaster. Nine months after the first lockdowns went into place, and with a vaccine now rolling out across the globe, shoppers are still consolidating trips and stockpiling goods.

But the descent is well underway. Quarterly comps and monthly sales have been coming down from their unsustainable peak this spring, and publicly traded grocers next year will be tying themselves in knots trying to make year-over-year sales declines look good. What’s at issue is not whether supermarkets can stem declining sales or not — they can’t fight gravity — but rather, where they will level off.

Supermarket CEOs like Vivek Sankaran of Albertsons and Rodney McMullen of Kroger have taken to pointing out that the pandemic has ushered in fundamental lifestyle changes that will benefit their companies over the long term. This includes more consumers working remotely and spending time in the kitchen, adding up to more dollars spent on dining in.