Five practices in the grocery sector to become a new retail norm
Artem Bielozorov outlines the practices that will continue to affect the industry in a post-Covid-19 retail landscape
26 May 2020 | 0
Many grocery retailers have experienced severe challenges in recent months, coping with a surge of traffic at both physical and online stores as customers stock piled and panic bought at the beginning of the Covid-19 crisis. Scaling up operations quickly to serve that demand proved particularly difficult for some.
The potential threat of transmitting or contracting the virus at each interaction with other people has transformed the customer journey in physical stores. Retailers of all types, but grocery ones in particular, must be prepared to act quickly to respond to these changes, while also learning from the experience of their counterparts in other countries.
Even if retail managers have come up with plans to overcome short-term disruptions, they need to begin medium- and long-term planning to help their business recover and adapt to the new, post-Covid-19 retail landscape.
Here are five practices which will heavily impact the grocery retail sector after the coronavirus pandemic has passed.
E-groceries shopping will grow
Online grocery shopping adoption has been relatively slow worldwide, but the current coronavirus pandemic will accelerate this dramatically.
According to a recent survey by CivicScience, 47% of customers said they were shopping for online groceries during the week of March 22, 2020, compared to 11% just three weeks before. A separate survey in the United States (March 13, 2020) found 41% of those who ordered food online during the previous week were first-time online grocery customers.
Among the major challenges with e-grocery for customers is getting used to selecting and ordering a large number of various items, which can be too much of an effort making people continue sticking to traditional in-store shopping. The forced quarantine, however, has significantly accelerated that process and the convenience inherent in ordering online and home delivery may be too much for some consumers to ignore after the pandemic is over.
BOPIS (buy online pick up in store)
Conventional definitions of “store” have begun to change. The current crisis has demonstrated that the most important job retailers do is simply helping the customers acquire products without them having to step foot inside the premises.
Similar to e-grocery, buy online pick-up in-store (BOPIS) has seen a sharp increase. In the U.S., Kroger announced its first pickup-only store for click-and-collect orders, Starbucks announced plans to make all of its stores to-go only for the foreseeable future, and Walgreens announced that it too would convert its 7,300 pharmacy drive-thru windows for grocery pickup.
For retailers, this comes with both pros and cons. In-store foot traffic drives planned and impulse purchases and helps them utilise the square footage they are already paying for which increases profitability. On the other hand, retailers will save on labour and shipping costs. Furthermore, pickup services drive sales from time- and convenience-minded customers who want to acquire products not just when they want them but where they most want them and with the peace of mind that human interaction is no longer the only available option.
Checkout-free retail as a new norm
Today, everyone is aware that keeping social distancing and staying out of potentially contaminated areas is of utmost importance and grocery retailers are putting huge effort into preventing the coronavirus from spreading in the stores through active use of technologies.
Checkout-free retail has already been in place in many shapes and sizes. It can come by way of mobile scan-and-go setups, like what one finds in Zippin or it can come by way of an Amazon-Go like experience, where people scan a barcode to get into a store and then just take everything they want off the shelves and walk out. Both options have their pros and cons in different situations, however, both settings mean consumers don’t have to interact with human beings at all.
Amazon is planning to open 3,000 cashierless stores by 2021 and it is not saving this technology for itself. Since March, a Just Walk Out technology used in Amazon Go stores and accompanying software has been offered to other retailers, enabling them to provide the same fast and convenient self-checkout experience to their own customers.
Contactless payments as a must
Along with the three previous practices, this trend is at its full speed these days. Health experts say the bacterium density on notes and coins is similar to that on grab bars in public transport and door handles in public toilets. So paying without touching any surface seems more reasonable than ever these days due to the coronavirus’ ability to survive on coins and notes passed between people and store staff.
Walmart has already announced that along with its new practice for customers to pay in store and pick up their order deliveries “contact free”, people can now simply use Walmart Pay on the Walmart app to initiate payment by way of a barcode scan as opposed to touching screens or anything else. Although this practice doesn’t seem brand new, Walmart’s announcement means the idea has now gone mainstream and that it will likely go across the entire retail industry. Even in “cash-loving” Germany, the amount of contactless bank card transactions has increased from 35% to 50% since the start of the year, the Association of German Banks says.
After the corona crisis is over, it makes no sense that consumers will return to the old cash-based payments when better, safer, and more convenient contactless options, whether they be retailers’ own apps or inventions like Apple Pay, are available. Retailers need to think hard of what a point-of-sale terminal will look like in the long run.
The Brookings Institute recently published its view that a recession is likely to bring about a sharp increase in labour-replacing automation — with employers firing less-skilled workers. They argue that automation grows fast during recessions and could bring fundamental changes to the labour force in the near future.
Today, warehouse, grocery, and delivery workers are the positions increasingly subject to automation. In parallel, AI solutions to improve automation in retail continue to advance, making a completely automated retail supply chain from warehouse to grocery or restaurant to home increasingly likely. However, it is not only blue-collar work that will be affected by new automation practices. Gartner predicts that technologies such as virtual personal assistants and chatbots will replace up to 70% of managerial duties.
While there are many uncertainties, one thing is for sure, consumer shopping habits are changing and retailers need to find reliable ways to embrace these changes while remaining financially viable.
Artem Bielozorov is a PhD student at the School of Business at Maynooth University, Ireland and Lero, the SFI Research Centre for Software. He is also a part of the Marie Sklodowska-Curie Training Network ‘PERFORM’ funded by the EU Horizon 2020 Programme.