In the Dark Days of Retail, Consumers’ Online Shift Lifts Mars

(Bloomberg) -- When the world locked itself down in March, Mars Inc. saw people snap up pet food like never before. Then Poul Weihrauch, who leads the food company’s pet care division, noticed another trend that could be more long-lasting: e-commerce sales went up 100%.

It’s clear now that while the panic buying trend is over, sales of household goods have quickened their migration online. New data from the U.S. Commerce Department on Friday showed grocery sales down 13.2% in April after a surge in March. But e-commerce growth remained strong, with non-store retail growth up 8.4%.

Mars, the closely held maker of Pedigree pet food, saw sales in the U.S. increase at a double-digit rate during a period of six weeks starting in mid-March. Sales fell back to normal levels toward the end of April, but the jump in e-commerce sales proved the need for companies to adapt as consumers drastically change their behavior, Weihrauch said in an interview.

“People will stick to that channel,” he said. “We’ve trained a new muscle as companies and we’ve found out that we can deal with it.”

While the pet industry saw spiking demand as consumers grabbed an extra bag or two, declines in the aftermath of stockpiling have been just as sharp. Because pets aren’t eating any more than they normally would, retail sales that more than doubled in March have plummeted since, according to data from market research firm Nielsen.

General Mills Inc., which makes Blue Buffalo, expects pet food sales from March to lift its revenue in the current quarter by a double-digit rate. The company updated its 2020 fiscal-year forecast to account for sales growth from pet food, comparing the “big stock-up” to that of toilet paper, Chief Executive Officer Jeffrey Harmening told investors Wednesday. General Mills gained as much as 2% Friday, to $63.43.

Despite the month of surging sales, “that all came back down to earth in April,” Harmening said. “The category declined and we wouldn’t be surprised if we saw that again in May.”

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