Wed 22nd Apr 2020
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Closing stores, self-isolation and quarantine have led to a substantial increase in demand from online retailers – particularly in certain categories like food and grocery.
In the UK, which is one of the world’s most advanced markets logistically, grocery retailers have all reported substantial increases in online orders. They are struggling to meet demand and are introducing measures to ramp up capacity. Last year online accounted for about 6% of grocery sales according to the IGD. Currently up to 90% of UK households would like to be able to order food online.
Part of the solution is to recruit more drivers, in particular to cover for those who are sick or in self-isolation. However, increasing capacity is far more complicated than recruiting drivers alone. Grocery deliveries are made using specialist temperature-controlled vans that can accommodate ambient, chilled and frozen products. Also, in many more densely populated areas, goods are picked from ‘dark stores’ – stores specifically used to fulfil online deliveries – and these have become overwhelmed.
Some online grocery businesses are struggling more than others, with Ocado’s operations exposed as unable to cope with the demand spike. Meanwhile Amazon Pantry had to temporarily close for business last week, to restock and shore up its operations.
We have seen a number of responses to help increase capacity. Supermarket operators are recruiting drivers and pickers, as well as scaling up click and collect capacity. Many smaller retailers, including independents, have set up delivery services, often promoted on social media and focusing efforts on the most vulnerable. Foodservice businesses, which are now closed or restricted only to takeaway, are innovating with some introducing a limited range of essentials to send out with food orders.
Morrisons has launched its Food Boxes initiative. For £35 shoppers receive a box of food and essentials, with a selection of products based on current availability, to feed two adults for about a week. Two boxes are available – vegetarian or meat eater options. This is an interesting idea, not just now while there are availability problems, but potentially in the longer-term as a cost-effective way for shoppers to buy food – perhaps focusing on seasonal products and accompanied by recipes and other cooking inspiration for the ingredients.
A new online shopper
As well as the retailer perspective, there are shopper implications. While much of the increasing demand is coming from well established online shoppers, the current crisis has led many shoppers who have never considered buying online to make their first digital order.
We can see from Google Trends data that over recent weeks there has been a sharp uplift in searches such as ‘how to order groceries online’. The current crisis has disrupted long term shopping behaviours, especially amongst older generations.
In the short term, during the immediate crisis, retailers and brands need to consider the requirements of these shoppers. We are already seeing, for example, retailers prioritising orders for more vulnerable shoppers.
As life starts to return to normal, it is likely that many new adopters of online shopping will continue to use online services. For brands and retailers that will have longer-term implications, not only because the online channel is likely to take a greater share of sales, but because many late adopters will have different requirements from ranges, customer service and a greater requirement for accessibility features in the user experience. Understanding new online shoppers and how to support them is important both now and in the future.
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