Billions in Consumer-Goods Sales Flowing Away From Big Cities
Billions in Consumer-Goods Sales Flowing Away From Big Cities
(Bloomberg) -- As the pandemic drives consumers out of their city apartments and into the suburbs, they’re taking billions of dollars in sales of packaged goods with them.
Data from research firm Nielsen show falling sales of consumer goods such as cleaning products and packaged food among the nation’s highest-performing retail locations in dense areas, like Manhattan.
Industry revenue has grown by about $85 billion, or 12%, from a year earlier, but more of this spending is coming from suburban and rural regions. Consumers are also buying more at smaller grocers and drugstores, said Scott McKenzie, head of Nielsen’s Global Intelligence unit, who characterized the trend as “like nothing we’ve ever seen.”
“We’re talking about billions of dollars moving at a pace in a way no one has been able to account for,” he said in an interview.
Sales in New York’s most dense postal codes have fallen by 14%, while revenue in low density regions of the city are up 10%, Nielsen data show. The trend has been replicated in other big cities too: Sales in Chicago’s most populous zip codes have slumped 6%, while similarly located Los Angeles retailers have seen 8% of sales vanish. In Dallas and Forth Worth, sales have fallen only slightly in the densest areas, but revenue in more sparsely populated zip codes have swelled 11%.
McKenzie said the sudden shift represented a “a fundamental disruption” to retailers’ long-established protocols for prioritizing certain retail locations.
Items such as cleaning products and frozen foods in particular have been in high demand since the pandemic began, straining supply chains. While production of most goods has stabilized after intermittent shortages during a round of intense pantry loading earlier this year, a surge of new coronavirus cases is sparking heightened activity once again.
McKenzie said companies will be challenged to improve their distribution networks to get products “on the right shelves in the right store.”
Packaged-goods companies like Procter & Gamble Inc. and Clorox Co. reported rapidly expanding sales this year as the global pandemic swiftly upended long established consumer trends.
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