The Coronavirus is changing the way we shop and eat. Forever.
Across the nation and the globe, consumers, manufacturers, foodservice operations and retailers are adapting as we all attempt to navigate how to feed ourselves in this socially distant, locked down world.
Necessity breeds innovation, and what we’re seeing now is the creation, adoption and implementation of a slew of new shopping practices. Some of these will become the new normal for everyone in a post-corona world.
So, what’s new, what’s on the rise and what do we expect to stick around after we settle into the new normal?
Direct to Consumer – DTC
The Direct to Consumer model has long been a staple outside of food and beverage. From eyeglasses to razors to makeup, it’s picked up a ton of traction in the last few years.
Grocery is the latest industry to experience this innovation, with a number of food and beverage startups, like Magic Spoon, Fresh Direct and Brandless (RIP). While recently, some established food and beverage brands started shipping their products straight to consumers as well, such as Nestle Waters ReadyRefresh and Perdue Farms (a client of ours).
And boy are they glad they did. When the stay-home guidelines started, many consumers cut out the middleman and went directly to the manufacturers for food and drinks. Clearly, they were willing to give these programs a shot. Both the examples mentioned above have limited quantity and delayed shipping notifications due to the high consumer demand.
Will this surge continue? We think it’s likely, with a caveat or two. The startups will continue to fill the gaps, and this epidemic will cause even more established brands to give a hard look at jumping into DTC.
If manufacturers can overcome shipping cost barriers, especially with fresh produce and meat, and logistical concerns, like shipping only 1-2 units instead of a pallet of cases, we think consumers will enjoy the convenience of getting their favorites brands delivered right to their home long after we’re allowed to venture back out.
App Dominance – Click and Collect & Delivery
Shifting to retailers, online grocery shopping was already growing leaps and bounds, with users doubling since August 2019.
Both Click and Collect (ordering and picking up at a retail location) and Delivery (full-service shopping brought straight to your home) were on their way to becoming household practices.
The coronavirus launched these programs into the stratosphere. As CNN quoted: “Downloads of Instacart, Walmart Grocery and Shipt increased 218%, 160%, and 124% respectively last Sunday compared with a year prior.” InstaCart also announced they’re looking to hire 300,000 additional shoppers due to demand.
It’s not just downloads – it’s usage too, with 31% of U.S. households using e-commerce for groceries in the last month.
A huge number of these were first-time users. A different survey found that around 41% of consumers who purchased groceries online in the last week said they were buying them online for the first time.
This explosive growth has driven innovation among retailers. H-E-B just announced that they’re partnering with Favor Delivery to help senior citizens with a low-cost option that delivers groceries directly to their doorsteps.
Kroger is piloting a dedicated pickup-only location, with absolutely no in-store shopping allowed. And in a similar vein, a number of local grocers are now offering curbside pickup that never offered it before.
DoorDash is even getting into the grocery delivery game. They’re partnering with grocers across the nation to deliver grocery orders to homes, with most retailers waiving the delivery fees.
We wholeheartedly believe that Click and Collect and Delivery options will keep up their new popularity. The stay-at-home guidelines proved to be a huge trial opportunity for these services, and consumers loved the convenience: 43% of respondents said they’re either extremely or very likely to continue ordering online.
We anticipate this will become an essential part of consumers’ everyday lives.
Online & To-Go Ordering
Restaurants and breweries are among the hardest hit by the Coronavirus response. With their eat-in or on-premise locations forced to close, they need to innovate and create a new revenue stream or close up shop.
Enter online ordering – a first for many of these establishments. Some are utilizing existing delivery services like UberEats, and DoorDash, while others are offering free curbside pickup for your orders.
We do see this continuing for restaurants after things go back to normal. Most already do it – with hostesses handling the online order pickup. Once the kinks are worked out, this should be standard practice.
For breweries, it’s a different story. Online beer ordering would create too many problems once people are allowed back through the doors. Sadly, we don’t see this carrying on.
In addition to delivery apps, we’re seeing restaurants and breweries turn to a number of non-traditional delivery systems to get their food and beverages to the people.
Couriers, bike delivery, even staff members are delivering orders to hungry and thirsty patron’s homes. Breweries are even changing their sales staff to delivery staff.
The delivery radius for these efforts is super limited – usually within just a few miles of their locations. But, it’s an extremely novel way to stay in the game, albeit at what has to be a high cost.
That cost is why we don’t see this carrying on past the quarantine. It’s being done out of necessity now, but we have to imagine this type of delivery is prohibitively costly.
If you haven’t been to a store recently, first off, good job on the social distancing. Second, it looks a lot different than it did before, and it’s not just the bare shelves.
Depending on when you go, the store may be closed, as many are restricting hours to cut down on staff.
While you’re there, you may not be able to grab as many items as you like. Strict quantity limits are being set on many items – mainly shelf-stable, toiletry and cleaning products. The in-store set is changing as well – particularly near checkout.
Also, be prepared to wait in line about as long as you shopped. Line queuing, safe product handling and distancing recommendations are in place to keep people safe and avoid hoarding.
The in-store experience will definitely change moving forward. We think it will take longer, quantities will remain restricted, and checking out will be a lot different.
After the shutdown, we think:
Many Americans will continue to order groceries from a favorite brand or retail outlet right from their couches.
For CPG companies, this shift in mentality signals that now is the time to get into the DTC game. Figuring out logistics and business structure is critical.
Digital shelf space is about to get a lot more crowded for Click and Collect. It was already important, and it’s only going to get more congested and tough as online grocery shopping becomes the norm.
Ordering takeout from almost anywhere
Many restaurants implemented online ordering, and we believe people will get used to ordering from their favorite places on their computers or phones.
For restaurants, the hard part – implementing a new service – is pretty much done. Now is the time to iron out the kinks and optimize. The opportunity to streamline, brand and open this up as a new revenue stream is ready and waiting.
In-store shopping will look a lot different.
When people actually get off their couches to go to the store to get their groceries, they’ll have to adjust to a different experience.
Product placements and displays will be more important than ever. And working with retailers about future quantity restrictions and inventory management could open the door for additional in-store opportunities.
Shopping is changing, and with change comes opportunity. Those adjusting to the habits now are only setting themselves up for success in the post-Coronavirus marketplace.