25 March 2020
Lessons from the field amid the spread of the coronavirus
All over the world fresh food, grocery, drug retailers and their suppliers are working tirelessly to support their Customers and their communities to provide essential services as the coronavirus pandemic impacts everyone’s daily lives.
We are in a time of unprecedented challenges for these retailers, their employees and their Customers. But even in these uncertain times, it has been heartening to see so many of these businesses put the Customer first and meet their most important needs, by listening to and caring for them, and adjusting their strategy and operational execution immediately – be it opening hours, services, pricing, product assortment or store experience. But in this time of crisis, it has also been crucial that retailers focus on those serving on the front lines of Customer engagement: the store and distribution colleagues. By recognising their contribution and making their lives simpler and easier, they can help them continue to serve Customers every day.
Alongside our local teams supporting many retailers and suppliers directly, by analysing changes in Customer behaviour and using data to help make decisions, we are also assessing learnings and sharing retailer responses from across our global network where retailers are at different stages of the pandemic, and some locations where social distancing has been in place many weeks.
Here are some of the learnings and highlights of responses in food retail we are seeing so far:
Learnings from China
The Chinese government implemented many practices in January and early February to control the coronavirus (during sales peak season of Chinese New Year, already a huge challenge to retailers) – extending the national holiday, suspending school and entertainment, limiting transportation, and reducing human contact with strict community-management measures.
Customer behaviour has changed over this period as more time was spent in the home and as we look at the pre vs post isolation period we are seeing a number of things:
Implications for other retailers
There’s much to learn from the data coming from China and other impacted regions. And while it is too early to fully quantify impact and trends, we do have early indications of the massive consumer changes underway.
First, Customers have prepared themselves for lockdowns by stocking staples, baby and pet care. Fear-hoarding is going hand-in-hand with urgent shopping of basic hygiene products. Much of this short-term, “long-life” pantry loading will likely see a significant lag in future consumption sales, such as medicines, household, and canned food.
Second, Customers are doing fewer trips as “social distancing” and quarantine restrictions change habits and encourage nearby shopping. In doing so, consumers are trading up to larger packs, and more “full shop” missions not always typical in those smaller local formats. Sales per visit is increasing by up to 20% in these stores.
Third, Customers are shopping more online. Most grocers are reporting record sales through ecommerce, causing some retailers to scramble to keep their websites up, maintain inventories in line with their orders, and fulfil the demand for delivery and pick-up. Interestingly, we’ve found that fresh food is no longer reliant on offline retail, which could cause a breakthrough point for ecommerce expansion. As consumers’ online shopping behaviour becomes more developed, with convenience and quick service as advantages, we expect online basket size and full grocery shops to help drive this channel expansion further even after the pandemic subsides.
Fourth, Customers are also adopting healthy living by being more conscious about personal hygiene and household cleaning. Though there are regional variations, prevention through improving hygiene practices is seen across the globe.
None of these challenges are trivial. It puts pressure on retailers to act immediately, with both clear strategies for Customer adaptation and operational agility. That said, to varying degrees of commitment, the world’s top retailers are adopting three principles:
Retailers who do this rapidly and best will help their communities though these difficult times and win trust with the most Customers, today and in the ever-uncertain future.
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