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Grocery Roundup: Vaccines Out, CPGs Up And Costo Expands Curbside Pickup

It was a particularly busy week in the grocery segment, as players big and small were pulling double duty attempting to up the level of the multichannel game while also participating in the push to accelerate vaccine distribution to those who need it most. A challenging two fronts to operate on, particularly as consumers’ grocery habits continue to shift.

One place that shift is occurring is in CPG (consumer packaged goods) sales. According to new data released by NCSolutions, consumer spending on CPGs increased 19 percent in 2020 as they hunkered down at home during most of the year. Consumers also showed an increased willingness to experiment with new brands and purchases. According to the data, 47 percent of American consumers have tried new brands and categories since the pandemic began, with snack foods, beverages and cleaning products leading the pack among new grocery buys.

“The increase in CPG spending coupled with the openness of consumers for new brands marks a clear opportunity for brands,” said Linda Dupree, CEO of NCSolutions observed.

Costco Joins the Curbside Pick-Up Party

After a long holdout when it comes to offering consumers the option to order online and pick up their groceries in their cars curbside, it seems the pandemic and the resultant swell in digital grocery ordering has motivated the beginnings of a change in position.

Costco as of this week has announced that it has started rolling out curbside pickup in partnership with Instacart at several New Mexico locations. The move is notable, as Costco had in the past announced that curbside was not something it would do.

The currently limited offering comes with several provisos. First, they’ve said it is temporary. Second, customers must order at least $100 of goods — and third, they must pay a $10 pickup fee, because the company explained that curbside pickup “adds an additional expense to our low-cost business model and limited markup structure.”

Costco’s rivals Sam’s Club and BJ’s Wholesale Club had added curbside pickup nationwide as of last summer — for free. Chief Financial Officer Richard Galanti noted in Costco’s latest earnings announcement that the firm’s overall lack of interest in curbside has, by and large, not changed: “We are not rethinking it. We continue to look at it and scratch our heads a little bit. But at this juncture, we don’t have any current plan to do so.”

According to PYMNTS’ recent Global Digital Shopping Index, circumstances may have forced Costco to change its plans. The survey of U.S. consumers found that interest in curbside pickup “has grown significantly, with 15.5 percent of those who purchase digitally citing it as their preferred way of shopping in July — up from 10.8 percent in March.”

Getting the Vaccine to Grocery’s Many Essential Workers

In recent weeks, stories have circulated throughout media of the heavy toll that the COVID-19 pandemic has exacted on workers in the grocery space in terms of daily health risk. In light of the mounting problem, it is perhaps unsurprising that those who employ those essential workers have been scaling up their efforts to distribute the vaccine.

Leading efforts this week was the grocery chain Lidl, which announced a new initiative to encourage its employees to get the vaccine by providing $200 in extra pay to all U.S. employees who do so. The additional payment will help offset the costs associated with vaccine administration, including travel costs and childcare. The company will also accommodate employee schedule changes for vaccine appointments.

“We are proud to provide our employees the resources they need to receive the COVID-19 vaccine free of any obstacles,” said Johannes Fieber, CEO of Lidl U.S. “From the outset of the pandemic, we have worked hard to put the health and safety of our employees first. From offering free COVID-19 healthcare to our entire workforce, to installing hospital-grade air filtration in our stores and warehouses to assure cleaner and healthier air, Lidl has made it a priority to adapt our policies to work better for our people during this pandemic. We are proud to do so again today to ensure that every team member who wants to get vaccinated is able to do so as soon as possible.”

That offering will go to an employee base that, according to internal data, is eagerly awaiting it 80 percent of workers report they are eager to get the vaccine as soon as possible.

And looking to make that possible sooner for their workers, Aldi this week announced plans to set up on-site vaccination clinics at its warehouses and offices in the U.S. Those clinics will reportedly cover vaccination costs and will provide up to four hours of paid time off — two hours per dose of the COVID-19 vaccine — to all hourly employees. Salaried employees will be offered “scheduling flexibility” to get their shots.

“Frontline essential workers” and grocery store associates are included in the second round of vaccinations outlined by the Centers for Disease Control and Prevention — and this week, Aldi and Lidl joined Trader Joe’s, Instacart and Dollar General in offering up incentives and simplifications for workers willing to get vaccines. Rules to actually administer those vaccines, however, are left to the individual states.

Southern Grocery IPO

In such a high-drama week in grocery news, even a big milestone event can get a bit lost in the shuffle. That seems to have been the case with the grocery segment’s big IPO of the week.

Southeastern Grocers, the parent company of brands such as Winn-Dixie, has unveiled the rollout of an initial public offering of 8.9 million shares of its common stock to be sold by some of its shareholders for an expected price in the range of $14 to $16 per share, according to the announcement.

The supermarket company itself is not selling any shares — instead, investors selling shares plan to grant a 30-day choice to buy as many as 1.335 million further shares of common stock. Southeastern Grocers will not get any net funds from the sale of the stock by the selling investors.

Goldman Sachs & Co. LLC and BofA Securities are serving as joint lead book-running managers and representatives of the underwriters for the deal. Additional book-running managers for the IPO include Wells Fargo Securities, BMO Capital Markets and Deutsche Bank Securities Inc. In addition, Truist Securities is serving as a co-manager for the IPO.

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