As the Corona virus pandemic spreads across the globe, threatening lives as well as livelihoods, it has clarified the vital role that grocery retailers play in society. Consumers expect these businesses to keep them fed and healthy, and groceries remain essential retailers in an uncertain situation that continues to evolve day by day. The short-term priorities for food retailers are clear. They should safeguard the health of employees and customers, maintain business continuity, set up nerve centres to manage their organisations’ work on the Covid-19 crisis, and manage demand to align with supply-chain capacity—for example, by reducing the assortment of offerings, rethinking promotions, or introducing new products.
The impact of the Corona virus pandemic and the lockdown it triggered is clearly visible in financial markets. But there is still no clarity on the deeper impact that it is having across businesses and industrial sectors. Based on assessments made by different analysts and industry body Ficci, here is an impact analysis on the retail sector.
Major loss of earnings, jobs
The outbreak of Corona virus is having a severe impact on people, economy and business. As responsible corporates, all retail players are adopting necessary preventive actions to ensure safety of their employees and customers. The end objective is to ensure easy and uninterrupted availability of essential food and grocery products at affordable prices so that people do not panic. During these critical times, it is imperative for all stakeholders to come together. Given the widespread effect of Covid-19, business across sectors is looking gloomy, impacting economy at large. Shutting down of malls and shops has severely hurt business for all retailers. This could lead to major job losses as companies would not be able to sustain this for too long.
Covid-19 disruption seems to be wide and deep, and unlike the demonetisation, impact
on consumer incomes appears significant with the hit on daily wagers and pay cuts across companies. Consumer demand, which was already slowing down before this disruption, is likely to weaken further, thereby reducing our growth forecasts.
Channel checks indicate severe disruption for consumer companies too with a sharp 50%+ drop in sales during the ongoing lockdown. While staples are relatively less affected and should recover, paints and retailers may see the impact continuing beyond the lockdown.
Reimagine safety, health and the scope of supply chains
Brands should care about in-store safety and to prefer offerings that are healthy and locally sourced than they did before Covid-19.
When shopping, consumers are worried about their personal safety: consumers are going to be afraid to go outside to shop for groceries. What’s more, hygiene and cleanliness consistently feature among the top three reasons for positive shopping experiences. Consumers say these same factors will remain important as they consider which grocers to go to.
Consumers report an increased focus on health and well-being in light of Covid-19, three out of four consumers say they are focussing on boosting their immunity through more exercise and healthy eating. In most countries, we also see an increase in consumption of products that are perceived to be healthy (for example, fresh foods, eggs, dairy and bottled water) and a drop in purchases of alcoholic beverages and snacks.
To address these consumer shifts, retailers have a clear role to play. They should rethink their offerings and provide healthier, more locally sourced products (including ready-to-eat and ready-to cook items) with a smaller environmental footprint. To meet rising customer expectations, these companies should also rethink the safety of the customer journey, whether it’s in store or via delivery. For example, they can use technologies such as self-checkout and cash-free transactions to reduce risks.
Reimagine how technology can enable delivery and the value chain
To respond to the current crisis and meet future ones, food retailers need to use technology in new and different ways to scale up their e-commerce channels and their capacity for home delivery. They can do so by partnering with last-mile players and cold-storage warehouses. Other options are expanding shifts in existing warehouses, using hybrid picking models, and converting a few retail locations into dark stores. Retailers can also use technology to enable their business and support consumers, not only by increasing their self-checkouts but also by looking end to end and considering how technology can make things safer for customers. Both e-commerce improvements and tech enablement will require new capabilities and talent—possibly from other industries—or an investment in re-skilling current employees.
Once food retailers have re-imagined their businesses, they will be better equipped to provide employment opportunities to people who are currently out of work, reshape their industry ecosystem, and work closely with business partners on how to operate in a new normal. Their mission is broader than meeting consumer demands—it involves supporting the well-being and livelihoods for millions of people.
(The author is the director of Smaart Eats. He can be contacted at care@smaarteats.com)