IRI Holiday Research Predicts Disrupted Consumer Behaviors, CPG Opportunities

As COVID-19 spikes again, americans rethink holiday plans, creating new opportunities for manufacturers and retailers that act quickly

Consumers are dramatically rethinking their holiday plans as a result of new surges in cases and the onset of colder weather in much of the country. People will hold smaller gatherings if they gather at all; adapt their purchasing behavior by buying more turkey cuts versus whole birds and avoid annual celebrations at restaurants (although they will continue to take out). These are among IRI’s new research findings, “Home for the Holidays.” IRI® is a global leader in innovative solutions and services for consumer, retail, and media companies.

“Shoppers are navigating the ongoing COVID-19 pandemic with a variety of altered behaviors, creating opportunities for manufacturers and retailers that recognize and address these new behaviors quickly,” said Joan Driggs, vice president of content and thought leadership at IRI. “CPG companies that satisfy these changing needs gain the opportunity to attract new shoppers as well as win back shoppers that might have migrated to other brands and/or channels earlier in the pandemic.”

IRI projects turkey sales for Thanksgiving to be strong, with an emphasis on smaller whole birds or cuts. Turkey and roasting meats have enjoyed a sales boom during the pandemic, with the most robust growth among younger and lower-income shoppers.

For Thanksgiving, just 29% of consumers will host or attend a meal with extended family who does not live with them, down from 48% last year, according to IRI’s new research. Also, 34% will prepare a meal just for themselves or their household this year, up from 27% last year. The median number of people sitting at the Thanksgiving dinner table this year will be five, down from eight in 2019.

While shoppers have been purchasing turkey cuts or smaller whole birds, turkey as a category has performed well during the pandemic:

• Between April and September, shoppers bought turkey nearly 4x more often than in the same period in 2019.

• National sales of turkey are up 19.6%, with 250,000 more pounds sold.

• Whole bird turkey sales have been particularly strong, up 28%, and $21 million in sales compared to last year.

• Higher prices and more people cooking at home will translate to higher food and beverage spending for some households. Still, a more significant number will spend less due to holding either smaller gatherings or no gatherings at all. Just over 20% of those who plan to spend less will buy a smaller turkey, and 15% will not purchase a whole turkey.

Similar to Thanksgiving, most Americans will likely stay home for the December holidays and celebrate with their immediate family. The number of consumers hosting meals for extended family that doesn’t live with them will drop from 48% in 2019 to 32% this year, while those preparing a special celebration just for themselves or their households will increase to 32% from 27% last year.

This behavior extends to gift-giving and those buying gifts for others outside their household, decreasing from 39% last year to 31% this year. And those buying gifts for themselves or their immediate household will decline to 31% from 35% last year. One-quarter of IRI research respondents will spend less on gifts this year, while just 14% plan to spend more.

Foodservice, such as food purchased to consume away from home and food purchased to consume at home, tend to spike in calendar Q4 of each year. This year, food away from home sales will continue to show weakness as cold weather drives consumers indoors while bars and restaurants continue to face social distancing restrictions. As a result of this trend and consumers’ desire to indulge after a difficult 2020, food at home will show stronger sales, giving CPG retailers and brands an additional opportunity to inspire creating at-home celebrations.

The typical spike in restaurant visits will not materialize this year. Restaurant visits have rebounded somewhat and are currently at roughly 50% of their October 2019 level, up from a nadir of 16.5% in April.

Manufacturers and retailers that act quickly on these trends have the opportunity to generate enhanced consumer loyalty, win new shoppers away from competitors, and win back shoppers who might have migrated to competitors earlier in the pandemic.

Consumers often give gourmet and specialty food items for the December holidays. Manufacturers can take advantage of this trend by adopting seasonal, festive packaging for great gift-giving appeal. They can promote holiday essentials to assist those shopping on a budget while also making available premium products for those interested in splurging. Optimizing online resources will enable shoppers to find new recipes and cooking tips, offer entertainment ideas, and suggest effective budgeting practices. Creative cross-promotions with other holiday items, such as complementary food categories, wine pairings, cooking utensils, or tableware, will also engender shopper loyalty.

Retailers should optimize their in-store displays and coordinate these displays with their online promotion strategies. To capture the imagination of shoppers who otherwise would have celebrated at restaurants, retailers can consider organizing displays that offer creative entertainment ideas on a budget or partner with local restaurants for meal fulfillment.