Free informative and Powerful Ecommerce Contents: Supermarkets, eCommerce, and the coronavirus. Tips for adaptation and delivery.

Today we are looking at fast-moving consumer goods. It’s an area that many of us have taken for granted in our daily lives but the current crisis is showing us just how fundamental it is. Doctors and nurses are rightly recognized as the heroes of the COVID-19 crisis, but there is also an army of drivers, grocery store workers, and warehouse staff exposing themselves to risks every day so that the rest of us can stay home and make occasional trips to stores.

This article is a look at the FMCG industry, and supermarkets in particular. It analyzes how the industry is affected by the coronavirus pandemic and what actions and innovations are helping solve current issues.

Previous posts in this industry-by-industry breakdown of the disruption caused by COVID-19 and how eCommerce can help businesses react:

- What eCommerce Managers and Directors can do to react to the coronavirus
- Tips for fashion retailers to offset the loss of high street sales
- The pharmacy sector and coronavirus: Tips for now and the future
- Small businesses and coronavirus. Examples from the music business

Before we dive into the details of the fast-moving consumer goods sector, here’s a quick overview of a few key findings:

Market impact: Sales peak with early panic buying then return to normal levels. Food and grocery is still wildly outperforming other industries.
eCommerce market impact: People are pushed into online sales and some will continue as converts. Businesses are looking to invest in eCommerce right now.
Supply: Consumer fears over supply chain collapse have proven to be unfounded.
In-store experiences: Retailers continue to adapt to the new reality. Measures will be in place for some time.
Delivery: Overwhelmed by demand, FMCG businesses need to immediately address delivery issues to help the old and infirm.

How has the coronavirus crisis impacted supermarkets?

Market impact

There is no denying that markets and industries are in freefall as a result of the continuing disruption and lockdowns all over the world. Average share prices are down 25% and those in the restaurant industry, for example, have fallen by 50% in the period from 31 Jan to 20 Mar 2020. And yet, the food and grocery market has grown by 4% over the same period, which is a stunning result in the current climate.

The clear reason is that consumers are not spending money on non-essentials. Fearful of what the coming months will bring, they are focusing on basic provisions and safety. According to French retailer Carrefour, vegetable deliveries increased by 600% year over year during the early weeks of the coronavirus crisis in China.

Signs are that customers buy more in a panic in the first weeks of the virus, fearing they will not be able to leave the house when the main wave of the virus hits, as well as by concern that supply chains will fail. However, as lockdowns occur, limited mobility does then cut purchase levels back down to something near normal. There is also a lessening in stockpiling as consumers begin to see that the supply chain is robust.

Demand peaks in countries between the first dozen cases of the disease and full government lockdowns at around the 500 – 1000 cases mark. It then drops back down and we don’t expect a continued drop now or in the future. In a Chinese survey, only 8% of respondents said that they will buy FMC goods less frequently or in smaller volumes after the crisis.

How has eCommerce been affected by the coronavirus?

FMCG eCommerce market impact

eCommerce accounted for around 17% of sales on the Chinese market prior to the coronavirus outbreak and has since seen significant growth. In fact, this increase would have been even greater if companies had logistics in place to cope with demand. It has only been a lack of manpower and delivery vehicles that have limited further expansion of market share. This is something that Amazon, with its grocery delivery service, is attempting to combat in the US by adding 100,000 new staff to its workforce as the pandemic hits the country.

This growth in eCommerce has those who use both in-store and online options increasingly turn to on-line only. eCommerce has also attracted new users, especially people in older age groups and residents of lower-tier cities trying online shopping for the first time. We can assume that eCommerce will not drop below pre-pandemic levels once the situation has passed; in fact, it would be fair to predict that many customers who have been forced to try online shopping in response to the crisis will see the benefits and become long-term converts.

“People are gradually moving from offline shopping to online and the habit won’t disappear when the epidemic is over. This will have a very positive impact on the whole eCommerce industry.”
Zhong Zhenshan, Vice-president of emerging technology research, IDC.

Early signs are that businesses also see the shift to online as a long-term situation. Many who had never considered eCommerce as the right path for business are already looking to it for the answer. March 2020 figures in Poland show that interest in opening an online store has increased by 50% in comparison to the same month last year.

What are the main challenges for food retailers during the coronavirus crisis?

The strain on supermarkets is visible: from empty shelves all over the UK, to distant delivery windows for online purchases, and efforts to protect key workers from the threat of contracting the virus. We’ll look at a few elements to see the main challenges and discuss some solutions.

Supply

In spite of panic-buying and fears of the collapse of the supply chain, it seems that the flow of goods to stores is not the biggest issue facing the FMCG sector. In India, for example, deliveries have been delayed and some items such as sanitizers have gone off shelves or are unavailable online. But, in general, retailers and fast-moving consumer goods companies say there are no shortages and that they will simply speed up supplies to shops while seeking to curb customers hoarding and stockpiling.

The main change in the supply chain is more likely to be retailers attempting to source goods from companies that are not facing huge numbers of COVID-19 cases. Rather than buying Italian cheese, French champagne, and Spanish tomatoes, supermarkets are turning to other less-affected countries for replacement goods or are sourcing nearer to home and bolstering local economies.

In-store experiences

The initial wave of shoppers in supermarkets was impossible for businesses in Europe and America to respond to in time, leading to general chaos and empty shelves. The lesson learned for other countries as the virus moves around the world is that the supply chain will hold but thousands of people in close proximity is a perfect environment for the transmission of the coronavirus. There are some fundamental things that FMCG businesses can do:

Take steps early to limit panic-buying
Initiate schemes, especially in the easy stages of the outbreak, to help older and more vulnerable people stock up on goods before they are forced into isolation
Create an early-bird hour for seniors to shop before the doors open to the wider public. Such schemes have been introduced by Tesco, Kaufland, Eurocash group, local Waitrose stores, and Biedronka
Get involved in (or create your own) social initiatives and ask younger, local residents if they will join your scheme and shop for seniors
Shut the doors for an hour in the middle of the day to allow workers to sanitize the store, look after their own hygiene, and take some respite from the high-pressure situation
Install plexiglass screens at the checkout to create a barrier between staff and customers
Use contactless payment methods like paywave to stop the handover of cash or numerous fingers touching keypads
Install guide stickers on shop floors to enable shoppers to maintain a safe distance from one another
Pre-pack goods like bread rolls, vegetables, and fruit in bundles to stop shoppers from touching goods that others will buy and eat
Use your loyalty program to communicate all changes, opening hours, and important health information directly to your most valued customers via text message and email
Be active and clear on social media. Make sure that all information is communicated on every channel

Delivery

The supply chain is robust, customers continue to show demand, and in-store experiences are being adapted to the current realities of the crisis. What’s more, most major supermarkets have some eCommerce presence and offer either Click & Collect or home delivery options. However, the delivery of goods is proving to be the weakest link in this chain from producers to the cupboards of end customers. It is the last mile that is causing the problem. Demand for home delivery has simply outstripped any conceivable expectation.

Lansing Sun, head of JD.com’s supply station in Yizhuang, Beijing, reported that the average courier previously delivered around 150 parcels to one residential complex but is now delivering over 200. Beijing authorities also recently reported that 20,000 couriers working for Meituan and Elema (selling ready meals) deliver a total of 400,000 orders per day.

Chinese cities have generally been ahead of the rest of the world in such deliveries, which is why the strain is showing so much elsewhere. In spite of their massive influx of workers, Amazon announced that the supply of millions of products will be delayed until 21 April 2020 due to the volume of orders. Emergency goods are being prioritized and the delays will mainly affect the US, UK, Italy, and France.

Supermarkets are similarly struggling to cope. In the UK, for example, a typical home delivery date for shopping ordered online is currently around three weeks from the time of order.

As companies like Tesco and Sainsbury’s have stopped Click & Collect services, it leaves seniors who have been told to stay home with two equally unappealing options: stay home and wait three weeks for delivery or break the isolation order and visit a crowded supermarket.

This is the most pressing current issue that FMCG businesses need to solve—and fast. We cannot isolate the entire world against a virus with the main aim of protecting the old and infirm if we then force those most vulnerable people to leave the house to get basic provisions.

It is a stop-gap measure but grassroots initiatives such as these young boys mobilizing shopping for the elderly in their local town need to be formalized and organized. Right now they are feel-good posts on Facebook but the reality is that society needs to coordinate such initiatives to curtail the length and impact of the crisis. Supermarkets can get engaged by using their own platforms to coordinate such groups.
Shops need to find a safe and effective way to offer Click & Collect once more. If seniors do need to leave the home, the trip should be as short as possible and with as few contact points as possible.
Businesses need to come together to solve the lack of vehicles and drivers to meet home delivery demand. Hire vehicle companies have spare vehicles that are not being used as extensively for business or private purposes while many people are in lockdown. Can these be hired cheaply to supermarkets to increase their fleets? As unemployment is set to rise dramatically, there will be no shortage of potential drivers but businesses can make this less painful by initiatives such as the cooperation announced between McDonald’s and Aldi in Germany. Unutilized restaurant workers can be fast-tracked into Aldi warehouse and delivery positions to help get food to people at home.
Small businesses can take advantage of the opportunity. Although they have been forced to close doors to the public, many local retailers are still able to organize home delivery and take sales online. Local greengrocers that still have supply are able to use stores as warehousing facilities and take orders by email or messenger and accept payment by transfer. It is a short-term solution but the implementation of a fast and easy eCommerce solution—with a product list, checkout, and payment gateway—is much easier than most people imagine.

How can we help retailers affected by the COVID-19 crisis?

If you are a business looking to take your sales online at this time, we have created a free online guide for anyone affected by the crisis. Our aim is to show anyone struggling with a loss of offline sales capacity how they can activate online sales at speed.

For larger businesses, we have extensive experience working with major international supermarket chains on their eCommerce platforms, loyalty programs, and innovative applications for solving urgent problems. We want to enable businesses to not only survive the current crisis but to improve their offerings and become stronger when we come out of the other side. Contact us and let’s talk about what we can do for your FMCG chain.