Both brands and retailers need to adapt to the disruption of normal purchase trends that the novel coronavirus (COVID-19) outbreak will present. We’ve identified four key ways businesses can react to the shifting consumer demands and purchasing patterns in response to the pandemic.
In New Zealand, we have witnessed incredible scenes of consumers depleting the shelves of all items in response to the virus. The chart below highlights the notable increase in dollar growth for a number of grocery categories.
It’s worth noting that the top three fastest-growing food categories traditionally experience seasonal sales peaks outside of the current period: canned and dried fruit sales peak around Christmas and soup sales peak in winter. These categories are seeing a new wave of growth as consumers continue to stockpile their pantries with shelf-stable food products.
1. Ready supply chains
The rush to stock up on pantry goods has had an almost immediate impact on supply chains for manufacturers of the most sought-after goods. And while we expect that replenishment will eventually catch up in most categories if demand slows, products that come off factory lines or go through distribution systems in virus-impacted countries could also face logistical issues. One way New Zealand supermarkets are responding to this is by shortening store hours to allow supermarket staff to keep the shelves stocked.
Similarly, online stockpiling has also put logistical pressure on home delivery networks, with a number of brands grappling to keep up with supply and some retailers suspending deliveries to manage demand. This new wave of e-commerce growth for the grocery sector presents an opportunity for retailers that have been waiting for online penetration to be high enough to justify the cost of investment in systems, additional vehicles and other logistical upgrades. However, with immense pressure on online shopping sites, new shoppers may encounter a suboptimal experience and frustrations with out-of-stocks. Selected stores are being transformed into online-only stores to enable retailers to meet the increasing demand for online orders. In Auckland, Countdown Grey Lynn is the first example of this.
2. Leverage technology
With millions working from home and digital connectivity taking even more of a hold on everyday habits, consumers will have greater motivation to more actively seek technology-enabled solutions to assist in everyday tasks like shopping. Companies that can leverage technologies—by meeting changing consumer demands online, enabling seamless interactions through direct-to-consumer offerings and enhancing consumer experience with augmented and virtual realities—have the opportunity to earn consumer loyalty well after consumers’ concerns subside. Demand for meal kit deliveries has increased across New Zealand as shoppers look to minimize their exposure risk and time spent in supermarket queues. Companies like My Food Bag and Woop are responding to this by offering pantry stock bags and boxes in addition to their usual solutions.
3. Emphasize quality and efficacy
Consumers will be seeking greater assurance that the products they buy are free of risk and of the highest quality when it comes to safety standards. In the short term, this intensified demand from consumers will require manufacturers, retailers and other related industry players to clearly communicate why their products and supply chains should be trusted. In-store, retailers are responding by limiting the number of customers in-store at any one time, installing perspex screens at checkouts, encouraging the use of contactless payments like paywave, and installing sticker guidelines on shop floors to enable shoppers to keep a safe distance from staff and other shoppers.
4. Be transparent about local origins
More than ever, shoppers want to understand the supply chain, with complete transparency from farm to factory to distribution, and they want details of the measures being taken to assure their safety. Fresh foods may face challenges as shoppers steer away from products that have travelled long distances, such as fruit and vegetables. Claims made on product packaging will become more important especially in assuaging some consumer concerns – particularly with promoting a product’s local origins.