The Impact of COVID-19 on the Fresh Food Industry

 

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Grocery and convenience stores were designated as “Essential Businesses” today and will remain open during the quarantine imposed by our state and federal governments as a result of the Coronavirus (COVID-19) emergency. Even though this is a favorable result for this industry and those who service it, no one will remain unscratched by the time the emergency ends, and we gain back some semblance of normality. While the global economy is expected to be affected in multiple ways by this pandemic, the Retail and Food Service industries specifically are expected to be impacted in the following key areas:

Accelerated adoption of online grocery shopping

Despite all the attention received lately, online shopping represented only 4% of grocery sales last year, according to Nielsen. This is changing rapidly in wake of this crisis. Downloads of shopping applications such as Instacart, Walmart, and Shipt were reported growing well over 100% simply this past weekend compared to their numbers a year ago. Most interesting of all, retailers such as Ahold are reporting that the recent influx of new users can be attributed to customers over the age of 60.

Darden restaurants, Yum Brands, and others that resisted the trend prior are now rushing to partner with delivery services such as DoorDash, Uber Eats, and Grubhub.

While the industry has just started gathering information about this phenomenon, the early signs of a drastic shift in customer behavior towards embracing online grocery shopping are crystal clear.

Variety and quality will separate winners form losers

 But, as usual, not every fresh product offered online is equal. Retailers such as Walmart and Costco, having years investing in their online infrastructure as well as developing a compelling assortment of fresh food items, will gain market share over their competition.  Another example of that would be the convenience store chain, Caseys, as they have expanded their variety of offerings to include ready to eat foods such as salads, sandwiches, designer beverages, and pizza, becoming the 5th largest pizza chain nationally.

Food Supply Chain remains resilient but could be impacted in the future

 Different from the supply chain disruptions experienced on categories like pharmaceuticals and paper products, the food supply in our country is plentiful and there are no shortages reported so far. Nevertheless, the contagion risks to farm workers and particularly to truck drivers may become a factor if the pandemic lasts for much longer. The American Trucking Association had reported a shortage of truck drivers several years ago, but state that the actual crisis has not exacerbated that shortage thus far. That does remain unclear as the demand for groceries could grow unabated in the future.

 Retailers that deliver on their promise of customer care will prevail over their competition

 Companies that go above and beyond to help their customers in these moments of need will likely emerge reinvigorated by the end of this crisis. Trader Joes is disinfecting their shopping carts and increasing personnel to match demand. Hy-Vee is no longer allowing reusable bags and installing window panels at their checkout to protect customers and employees. Raleys is taking senior care to the next level by not only offering exclusive early shopping hours but also through offering Essential Bags containing fresh items and pantry staples at large discounts.

A sensible and empathetical response to their customers needs in this time of peril will reinforce customer loyalty and improve their business in the long run.

For more information on COVID-19 and how to stay safe, we are sharing the following information to keep you informed:

Dr. Lin addresses the global concerns and how to prevent the spread in this short clip. View here.  

Proper Hand Washing Technique. You’re doing it all wrong. View here.

Forbes | Protecting Grocery Store Workers and Shoppers From COVID-19. Read here.

 

Jesus Mathus_Picture

Jesus Mathus
Global Head of Retail Solutions
813.849.1818 ext. 22597