How COVID-19 has permanently changed our supermarkets

6 May 2020 — Inside Retail

COVID-19 has hit many segments of the retail industry in different ways. For some, it brought all trade to a screeching halt, while others saw new opportunities and responsibilities to their customers.

Supermarkets are among those that have experienced a huge surge since the pandemic and last week, both major players, Coles and Woolworths, posted strong Q3 results as a result of their integral role in serving customers in lockdown.

Coles announced last week that it had seen its highest third quarter comparable sales growth in its history at 13.1 per cent as a result of panic buying and stockpiling.

Woolworths saw a 10.3 per cent spike in food sales in the same period, which CEO Brad Banducci described as one of the “most challenging periods in the history of Woolworths”.

However, following the sales surges in March, both supermarkets have seen customer demand moderate back to pre-virus levels, signalling the storm may have passed.

“The rate of sales growth for the remainder of the financial year is very difficult to predict at this stage,” Woolworths said.

And while the past few months have been tough for supermarkets and consumers alike, there are lessons that can be learned from how Coles and Woolies temporarily repositioned themselves and rode the wave of being truly essential.

“Some supermarkets were much more prepared than others for the COVID-19 pandemic and they have been able to keep much more product in stock, and they’ve done an admirable job of responding to demand for online grocery ordering and delivery,” Brittain Ladd, business consultant and chief marketing officer at Pulse Integration, told Inside Retail.

“I believe the biggest lesson learned by supermarkets is that they must invest in installing micro-fulfilment centers… Online demand is going to grow by double digits, [and] supermarkets must automate the fulfilment of online and in-store pickup orders.

“The goal should be to turn grocery stores into big vending machines that can dispense groceries 24/7, 365 days a year.”

According to Ladd, the coronavirus is likely to be a seasonal virus that comes and goes as the year progresses and social distancing is likely to become the norm – as well as government-mandated store closures.

Dunnhumby commercial director Keri-Jane Jacka agrees and believes that retailers must revisit merchandising and in-store media portfolios as social distancing continues throughout the year, and retail reopens in phases.

And while Jacka says it is difficult for non-supermarket retailers to take specific lessons from Coles and Woolies, there are a number of overarching themes that can be seen.

“What we can say for sure is that putting your customers first will always deliver results and this should be the focus of all retail strategies, while using data to guide decision making,” Jacka said.

“Value for money will become an even greater focus as economic shocks and rates of unemployment encourage customers to save where they can.”

Additionally, the importance of e-commerce is likely to shift significantly with increasingly more customers shopping online in self-isolation.

“We’re seeing higher satisfaction scores from online shopping compared to online. This shift is expected to continue, especially in the elderly segment of customers who may not have previously seen this as a viable option but who are now shopping online out of necessity,” said Jacka.

“Some of them will not switch back.”

This story first ran in Inside Retail Weekly. Given the current crisis, we have decided to unlock all premium content related to COVID-19. If you would like to support Inside Retail, please consider subscribing here.