COVID-19: what can we learn from Melbourne's spike in cases?

Nick Miles
Head of Insight - Asia Pacific
@RetailAnalysis

Date : 09 July 2020

Following a spike in new cases and the renewed lockdown of parts of Australia's second largest city, how have retailers responded and what can other businesses and markets learn?

1. Short term buying restrictions

As reports of new COVID-19 cases in Melbourne were revealed, Coles and Woolworths were both quick to respond to reinstigating buying restrictions on certain products in response to increased demand. Although the restrictions initially helped manage stock flow in the face of renewed panic buying, they only covered select products, such as toilet paper, hand sanitiser, paper towels, flour, sugar, pasta and mince, and they did not stop reports of shelves being stripped bare of products across the city. As supply chains recovered, at the start of the week, from temporary delays, plus responded to the increased demand, buying restrictions were once again lifted. Although Woolworths did maintained a limit on tiolet paper purchases. The lifting of restrictions co-insidered with Melbourne enforcing a new six week lockdown phase, with this resulting in a resurgence in panic buying. Coles and Woolworths quickly reinstate buying limits on select lines for a third time in Victoria. 

Responding quickly with buying restrictions will help retailers and suppliers deal better with panic buying resulting from new waves in the virus. However, limiting these to the highest demand items will likely promote shoppers to switch panic buying to other categories. Working closely with local government should clearly be a priority for retailers, to ensure that purchase restriction policies will be well timed and effective. Woolworths Supermarkets Managing Director, Claire Peters, commented, "We will continue to monitor the situation closely and will not hesitate to reinstate product limits if needed."

2. Keeping online operations up and running

In the first wave of coronavirus in Australia, Coles and Woolworths both had to suspended online shopping services. Although luckily we have not seen a repeat of this over the past few weeks, there remain some challenges. Coles has been quick to respond, converting its supermarket in Coburg into a temporary online fulfilment centre, providing deliveries for 3,000 residents living in enforced lockdown. As part of this, Coles and Woolworths are also working with the Victorian Government to donate boxes and bags of fresh food and groceries to families in need. Woolworths has also brought in new delivery vehicles to support the increase in demand and has made over 330,000 deliveries to vulnerable and elderly customers in Victoria since launching its Priority Assistance initiative.

Both retailer's online operations have recovered well since the initial blip and there has been some really impressive innovation in this area. Ensuring that the online channel can remain trading is vital, but not without its challenges. Woolworths has had to temporarily close a major distribution centre in West Footscray for a second time in a week, which fulfils online orders to Melbourne's northern and western suburbs, as well as the CBD, due to a number of staff members testing positive for COVID-19. In response it has managed to increase its delivery capacity via its supermarket network. In cities where retailers centralise their online fulfilment, have contingency plans in place if a centre goes offline will be important.

3. Making staff feel safe and valued

One of the major challenges for retailers globally at the onset of the pandemic was managing staffing levels and ensuring that their safety was the number one priority. In Victoria, Woolworths has extended leave entitlements for vulnerable staff members, is enforcing compulsory temperature checks on staff in stores within lockdown postcodes, has brought in nurses at certain stores stores, its distribution centres and online fulfilment centre to help staff, plus will continue to enforce social distancing and hygiene protocol in all of its supermarkets.

Looking after staff, as well as customers, should be a top priority for all retailers, enabling operations to keep running. Retailers are learning to go to extended lengths to ensure this is the case. Even if it impacts profitability in the short term, the longer term benefits of staff loyalty, as well as how shoppers will remember how retailers performed throughout these challenging time, will likely pay back.