Beyond COVID: The Impact on Grocery

July 7, 2020

By Jim Dudlicek, NGA Director of Communications and External Affairs

The COVID-19 pandemic has brought on more change in the food retailing industry in the last three months than it has in the past decade – and more change is anticipated.

Deemed as essential industries to the nation’s infrastructure, stakeholders throughout the supply chain are feeding families, creating new distribution channels and adapting to shifting consumer demands.

Among the new behaviors and procedures that have emerged during the pandemic, which are the most likely to stick around for the foreseeable future?

Exploring that question in a recent webinar hosted by NGA were Dr. Russell J. Zwanka, associate professor of food and CPG marketing at Western Michigan University, and Dr. Marcel Zondag, associate professor of marketing and integrated supply management at WMU.

Here are some key takeaways from their discussion:

Social distancing will loosen but sanitation will stay tight: Zwanka expects that social distancing intervals will be reduced but not eliminated, and retailers will “soften the draconian messaging.” One-way aisles are already on their way out, he noted, as they’ve proven to be a hassle, lengthening shopping trips and subjecting shoppers to “wrong-way shaming” in stores and on social media. But deeper and more-frequent cleaning procedures will remain, as likely will plexiglass dividers, with this caveat: “We need to make sure we’re not building barriers between us and our customers more than we have to.”

Shoppers seek values, grocers rationalize SKUs: The pandemic has accelerated trends already in motion, including the growth of hard-discount retailers, as the economic downturn compels consumers to stretch their dollars even further than needed during the 2008 recession. Changes in shopping habits have offered retailers clues as to the true demand for and elasticity of specific products and brands. Hard-discounters “are perfectly positioned. Where other grocers are de-SKU-ing, they already have an efficient assortment,” Zwanka said. “Store brands will become more prominent, especially if you make it an everyday value.”

More home cooking: Grocers should make sure their employees are well-versed in cooking advice, because consumers will be seeking guidance as they continue to prepare more of their own food at home. However, “COVID baking” by sheltering families will likely ebb as summer temperatures discourage oven use and kids head back to school in the fall, as is the expectation at least in some regions. “Meal kits inside the store should continue to grow for people who don’t trust their own cooking,” Zwanka said. Partnerships with local restaurants to offer branded heat-and-eat meals, as being done by some grocers, will serve consumer demand for ordering full meals from the supermarket.

Online shopping keeps growing but store experience important: Touchless transactions surged in importance during the crisis, pushing online growth ahead by years in a matter of weeks. But many consumers will be hungry for a more tactile experience and grocers should be prepared to deliver one that generates excitement while still making their guests feel safe. “Bells, whistles, smells, happy people – the challenge is to bring that back,” Zwanka said. Zondag added, “There’s a lot here that will make shopping fun again and make you stronger as an operator moving forward.”

Grocers will have to reinvent how they approach hot bars and salad bars, sampling and cooking demonstrations within the redefined comfort zones of their shoppers. Engaging with shoppers is a key competency of independent grocers, Zwanka noted: “If all we’re doing is getting goods to people’s homes, then we’re all just Walmart.”

To view this complete webinar and others in the series, visit: https://nga.sclivelearningcenter.com/MVSite/default.aspx