During the first two months of 2020, retail and foodservice sales increased up to 6.5% year-over-year. Amid the economic crisis brought by coronavirus, with massive mall and stores closures across the country, only essential businesses like grocery stores remain open. Which makes us wonder what will be the future of grocery shopping after coronavirus.
As shoppers turn to survival mode, the potential impact of the coronavirus to the retail economy is still unfathomable.
Experts suggest that even as daily life goes back to normal, we may have to continue to wear masks, and observe social distancing until a vaccine is developed, tested, and deployed.
Here’s a glimpse of what lies ahead.
The Future Is Now
The rise of ecommerce has forced retailers to adapt and adjust to new consumer trends. Companies that have embraced this challenge are thriving, while those without the vision — or resources — to reinvent themselves in time have been left behind and, in many cases, forced to close shop or file for bankruptcy.
This evolutionary process was set in motion long before this pandemic became everyday fodder, but the crisis brought about by the pandemic has sped up the timeline exponentially.
Grocery stores and retailers that had begun to test delivery and curbside pick-up options will have to adjust their business model and logistics in order to streamline those services in a permanent and sustainable manner.
People’s habits, especially when it comes to shopping and cooking, have been impacted by the coronavirus outbreak.
Grocery stores are facing supply shortages and restaurants are closing, and the restrictions to go outside limit exposure and change consumption habits.
One of the biggest changes we see, is that more and more consumers are using services for curbside pickup or home delivery. These first-time buyers have a high probability of converting to this way of shopping permanently as they get used to it and a lot of them are trying online shopping for the first time.
Back in 2019, Coresight Research reported that in a survey to 2,500 grocery shoppers, 41% reported to making a “small amount” of grocery shopping online, while 12% said they bought “most or almost” online. – Forbes
As of a survey carried out in March 2020, 41% of online buyers were first-timers.
It is likely that quarantine will give people enough time to create new habits and adopt online shopping as part of their routine.
Here are six forecasts to help you understand better the direction that we think consumers’ trends will be heading during and after the pandemic:
1. People will continue to stock up
Before quarantine, some people visited grocery stores twice a week, or more. People have been learning to stock up. This is a skill that will likely continue to be present, even after the pandemic is over.
2. Hello, Efficient Shopping
The days of aimless wandering around grocery aisles are done. We don’t go to the supermarket as often as we used to, and when we do, social distancing is in place. Consumers are learning how to better organize and, more importantly, stick to their grocery list.
3. Long shelf life is a must!
Sales of fresh produce continue to be on the rise. However, it’s important to know that people are considering fruits and veggies that last longer.
Last month’s increase in fresh produce consumption was mainly due to demand for oranges and lemons that last longer. Potatoes are also in fashion! For weeks, they’ve been the top growth leader for fresh produce according to an industry report.
Frozen and canned goods are making a comeback. In spite of their popularity decreasing in the last couple of years, nowadays people are remembering how useful these presentations are.
4. Deliveries and pickups
Before the pandemic, deliveries accounted for 3 percent of all grocery sales.
Shelter-in-place restrictions and lockdowns boosted this metric, but many retailers are not prepared logistically to widely implement this service yet.
Managing and supporting home delivery and curbside pickup is not cost efficient for a lot of grocery stores. A more realistic compromise, for many, is the buy-online-pickup-in-store (BOPIS) model, which we will describe further down.
5. Mobile payments and online payments are here to stay
These payment alternatives are taking over in times of pandemic. Other payment systems, like Apple Watches or smartphones to pay at the checkout, will become increasingly popular as an alternative to germ-filled cash transactions and credit card machines.
6. Local groceries
With the mass demand at bigger grocery stores, like Walmart, consumers have experienced crowded places, long lines, and lack of items. Eventually, customers will turn to their local grocery store to get what they need.
What we’ve explained so far is only the tip of the iceberg, and there are a few things to keep in mind:
According to Forbes, the share leaders in the American market will be:
- Food and beverage stores with 12.5% of the nation’s total ($6.2 trillion retail and food service sales last year);
- Electronic shopping (11%);
- General merchandise stores (9.2%), excluding department stores; and
- At a lesser extent, health and personal care stores with 5.7% retail market share.
How Can Grocery Stores Prepare?
In our everyday lives, such a spike in demand would mean good news for any retailer. But the times we’re living has taken the grocery industry almost to the breaking point.
Taking care of employees
Due to the emergency, big players have announced they have plans to hire almost half a million workers: Walmart adding 150,000, Amazon 100,000, Dollar General and CVS 50,000.
Grocery store workers need to get better treatment.
Brands are realizing that their employees are what binds customers to the brand and not just the prices.
Many retailers are offering incentives to their employees and temporary pay hikes.
Most likely, hourly pay will be adjusted in the long term and profits may take a hit.
Automation and Innovation
History has taught us that innovation thrives in times of crisis. Businesses will find new ways to sell their products to consumers that are obliged to remain home.
Retailers that were hesitant to try ecommerce are finally turning to it, thinking of ways to provide the same experience to their clients.
Automation and innovation will have a much faster expansion. According to different growth scenarios, many retailers and consumers will prefer the BOPIS model.
Stores will save time and money in delivery logistics and customers seem to be happier since they’ve gained more control.
This could potentially range from using drone delivery to automated warehouse processes.
Grocery retailers need to be prepared for the boom in online sales after the pandemic ends. Considering new shopping habits and offering a range of options to better take care of customers will be the factor that makes or break a store in this crisis.