Coronavirus (COVID-19): three ways retail is starting to look different

Stewart Samuel
Program Director - Canada

Date : 26 March 2020

With retailers expecting elevated demand levels to continue, although for most at slightly lower levels than recent weeks, we look at what changes are being made to support this and how they could shape food retailing in the future.

1. Range rationalisation: choice vs efficiency

Most retailers are undertaking some form of range rationalisation, especially in high-demand categories. These include paper products, cleaners and sanitizers and dry goods such as canned vegetable, pasta and rice. This enables retailers and suppliers to focus on the high-volume lines, have product available for shoppers and simplify in-store replenishment.

For some brands and long-tail products, this is likely to mean a temporary loss of space. With many retailers focusing on larger pack sizes, this can also cause a challenge with online deliveries, taking up more space in vehicles and lowering drop-density.

Post-crisis, it will be interesting to see if this starts to shape retailer thinking more broadly around customer choice, and its balance with operating efficiency. For most supermarket retailers, customer choice has been the driver behind range development, while discounters, notably Aldi and Lidl, operating efficiency has been prioritised.

This approach has not been to their detriment, and while some retailers may have been reluctant to cut back ranges previously, the hard data from the next few months will may show that they don’t need to add back everything that has been taken out.

2. Dialling-down promotions: reinforcing value in other ways

Many retailers are also reducing the number of promotions being run in-store or curtailing multi-buy deals. This is also being driven through an efficiency lens. It allows retailers and suppliers to dedicate resources to managing key volume lines and use in-store promotional space for additional displays of these products.

As with the range rationalisation exercise, retailers will have the opportunity to assess the impact of running fewer promotions in-store, especially in categories that are not massively impacted by the Coronavirus pandemic. The challenge of such an approach for retailers is to continue demonstrating value to their shoppers.

In the current trading environment, we have seen some retailers introduce larger pack-formats, which are more often found in wholesale and foodservice concepts, to support this. Post-crisis, promotions will remain an important traffic driver, but the volume and type of promotions offered could change.

3. Closing foodservice: an opportunity to sense-check direction of travel

Foodservice and freshly prepared food-to-go options have been closed in most retailers that offer them. This is mainly to reduce community spread of Coronavirus, but also reflects the lack of meal-driven missions with the switch for many consumers to work at home. This also helps support in-store efficiencies, enabling retailers to deploy staff elsewhere.

The pandemic brings to life the complexities of operating foodservice within the retail environment. Investing in this area has been a key trend for several years, and one which we expected to continue developing. However, could the crisis put a brake on this development? For some retailers it could cause them to pause and re-think their plans in this area. Rather than operating in-house solutions, partnering with third-parties become more common, while some may look to develop more grab-and-go options, rather than the freshly prepared solutions that many have been championing.

For more on Coronavirus (COVID-19)

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