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The Future of Grocery After Coronavirus

Michael Begg
Michael Begg

In a post-COVID-19 world, retailers need to evolve quickly to manage peak orders and stay relevant in this competitive market.

The coronavirus outbreak took everyone off-guard, altering our lives in ways we never imagined. We were left with no other choice but to adapt to a new social order in which physical distancing and stringent hygiene measures play a crucial role in the way we interact with others.

The nation's most popular states are still in a virtual lockdown and home seclusion orders have impacted multiple sectors of the economy.

Considering that we're merely allowed to leave our houses in search of food, it makes me reflect on the adjustments retailers and shoppers will have to make in the future to survive this "new normal."

How has grocery shopping changed in the last couple of months?

According to a Census Bureau report, from January to March 2020, grocery store sales rose by 8.9% from the previous three-month period and by 11.6% in comparison to last year. Any retailer would be thrilled to see an increase in demand in ordinary times, but this situation is pushing many brands to the breaking point.

Therefore, retailers will have to pay close attention to the current trends that will set the pace of grocery shopping in the near future.

Goodbye deliveries. Hello BOPIS!

The BOPIS (buy online and pick up in-store) model is here to stay. In fact, it's a reality years in the making. Large retailers have been perfecting this model for quite a while now as a way to appease impatient shoppers who just can't bear the two-day shipping turnaround of the modern e-commerce era.

Nowadays, some small and midsize businesses are using the BOPIS model as an alternative to home deliveries.

A predilection for long-lasting foods and immune-boosting products

Changes in shopping reflect on the way people cook. Even if menu planning remains a thing, recipes might not. Fewer trips to the store call for more flexibility and creativity when people don't have all the ingredients of a recipe. There has also been an increase in demand for long-lasting items, such as canned foods, pasta, snacks and dairy products.

However, there are people who are striving to maintain a healthy diet during confinement and are opting for immune-boosting products, alongside fruits and vegetables that last longer, like oranges, lemons and potatoes. For weeks, these have been the top growth leader for fresh produce according to an industry report.

Also, cleaning supplies, antibacterial gel and face masks are now some of the fastest-moving products worldwide.

Hour-long waits at big-box retailers

Due to the physical distancing restrictions and the one-cart-per-person policy, shoppers have grown tired of hour-long waits at big-box retailers. The good news is that smaller grocers have benefited from this.

Shoppers are turning to their local stores now for the convenience of finding things more easily, finding small gatherings of people and diverse organic offerings.

But how can grocery store brands take advantage of this e-commerce boom?

Online shopping: How can small and midsized businesses adapt to the 'new normal?'

In the last couple of months, online shopping has seen exponential growth. With government officials encouraging people to turn to e-commerce as a preventive measure, even the older generation of shoppers have given online shopping a try.

Over the last two decades, countries like Japan and the U.S. have built up a culture surrounding online shopping. People in these countries feel comfortable with acquiring goods through e-commerce, and they have multiple accounts on different platforms.

Due to the massive increases in demand, several companies and e-commerce platforms were forced to restructure their logistics overnight to remain competitive. Such is the case of Amazon, which added 100,000 new positions to its delivery network (including Amazon Fresh and Whole Foods).

Reality is quite different in other parts of the world where online shopping is still in its early stages. This has made it extremely difficult for brands and stores to keep up with this sudden shift.

Diversifying from grocery stores to e-commerce platforms

While it is clear that getting consumers to try out a new service is not the easiest task, as a grocery retailer, there are some things you should consider if you want to stay on top of your game by turning to e-commerce to market your products for the years to come.

1. Your brand should provide a sense of comfort.

In situations of anxiety or depression, consumers more often reach for foods or products that comfort them or remind them of their childhood. During these times, shoppers are being drawn back into the comforts of soups and canned beans from trusted known brands like Campbell's and Heinz, not because they are necessarily the most nutritious, but because it makes them feel safe.

2. Focus your production on high-demand items.

As a retailer, it's a good idea to identify SKUs that move slower, either because of the pack size or flavor, and suspend them temporarily. Consider running surveys often to have a clearer idea of what your customers prefer under certain circumstances.

3. Use cold storage for fulfilling frozen and fresh products.

A possible outcome of this crisis is that people will shop at the store only for fresh produce while they get their nonperishables delivered to their homes. You may want to consider servicing both needs!

Fulfilling fresh and frozen groceries is a big challenge in the grocery industry. Cold-storage fulfillment can make chopped veggies or precooked meals like salads or frozen foods possible for online shopping.

If you want to offer fresh produce online, make sure you add a section into your product detail page in which customers can specify how exactly they want their fruits and veggies picked and delivered. This will add extra value to your selling strategy.

4. Make your product available.

Remember the toilet paper and pasta shortage? Consumers have a preference for a certain brand. But in the midst of a pandemic, and the panic buying surrounding this event, brand reputation took a back seat, and shoppers were holding onto whatever they could grab along their way. Therefore, start thinking about how efficiently you'd be able to restock shelves should such a case arises in the future and plan accordingly.

5. Use BOPIS as an alternative to two-day or one-week deliveries.

Many customers have found online shopping frustrating and inefficient while grocery stores spend about $20 on labor for a delivery order and about $7 for an in-store pickup.

Order-pickup lockers might be a useful solution since they retain online sales without increasing inventory space. Adobe Analytics reported that from February 24 to March 21, 2020, BOPIS orders increased 62%; and while the arrival of COVID-19 certainly played role, this new phenomenon is by no means a fad.

Pickups will continue to increase post-pandemic. This is going to be a challenge for grocery retailers' e-commerce sales, fulfillment and BOPIS) plans based upon previously predictable growth scenarios.

6. Use delivery services like Instacart.

Reliable grocery delivery and pick-up services like Instacart can be your ally in your new venture, if you don't have the budget or infrastructure to fulfill those orders in-house. Your customers will receive their products the same day, usually in two hours or less.

Closing thoughts

The COVID-19 pandemic works as a dramatic reminder that retailers must remain agile. There is more than one piece at play, besides the boom of e-commerce. Not only will retailers have to answer the increased demand, they also need to evolve quickly to manage peak orders and to stay relevant in this competitive market.

Image Credit: DIPA / Getty Images
Michael Begg
Michael Begg Member
Mike is the Co-Founder, CMO and CFO of AMZ Advisers, a digital marketing agency. Mike is also the President and Co-Founder of Bosque de Talentos, a nearshoring agency.