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These Consumer Goods Companies Have Seen Major Shifts Since the Pandemic

By Brian Withers and Demitri Kalogeropoulos – Oct 2, 2021 at 10:15AM

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Two companies' recent earnings reports point to big changes in consumer behavior.

Businesses have largely reopened since last year's pandemic-related closures, but the effects of the ongoing health crisis are still playing out -- and may be permanent.

In this video from "The 5" on Motley Fool Liverecorded on Sept. 23, Fool.com contributors Brian Withers and Demitri Kalogeropoulos highlight recent reports from two consumer goods companies that paint a good picture of how consumer habits have changed over the past year.

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Brian Withers: I'm going to go to Demitri. When are we getting back to normal, Demitri? [laughs]

Demitri Kalogeropoulos: Let me get out my calendar out, yeah. I think I'm on that camp of I agree with Toby in terms of our field. This feels a little different. Feels like it could be a multiyear thing or maybe a "new normal" situation. I was thinking of all these changes and behavior that we've seen and there were a couple of consumer-focused companies that reported earnings this week.

One example that hits on this point a little bit is General Mills (GIS 1.29%). It's the cereal giant and they reported earnings yesterday and they're seeing this persistent lift in snacks and eating and breakfast at home, that used to be a really big thing that the restaurants were targeting before the pandemic. No one was ever eating at home, I guess. But General Mills is noticing, so this was the quarter on top of last year's huge growth number, they grew again a little bit this year in this quarter. They're saying what they're talking about is what seems to be a persistent, what they think is just a permanent lift in demand for being around the house and eating around the house. At the same time though, they also complained about this is the highest number of job openings they've ever had in their industry, in manufacturing and the supply chain is under this historic stress for that reason. It's one of those win-loss situations.

The other company that we talked about yesterday was Stitch Fix (SFIX -0.79%). The company that specializes on online apparel selling. They had a good interesting number. They talked about how before the pandemic they estimated around 25% of the apparel industry sales happen online. Now, that number's at 40%. You think about that, you're talking about just numbers like that which is massive. That's like a 10-year shift in one year and they say they believe that's a permanent shift. They don't think we're even taking out small setback ever again, this is just the way people act now. In an environment like that where we're just seeing it's interesting, obviously nobody knows, but it looks like the pandemic shot loose a bunch of different behavior changes that seem to be sticking around and could be for years.

Then the question I got to think about is, how do these industries get enough workers, for example, like restaurants and delivery drivers for pizza. Basically there's just a lot and in some cases they're going to have to change their incentive structure, they're going to have to pay more and you see that in fast food restaurants and places like that and hospitality that just, it seems like they might have to think about some wholesale changes, how they attract and keep employees.

Demitri Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Stitch Fix. The Motley Fool has a disclosure policy.

Stocks Mentioned

General Mills Stock Quote
General Mills
GIS
$86.52 (1.29%) $1.10
Stitch Fix Stock Quote
Stitch Fix
SFIX
$3.79 (-0.79%) $0.03

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