This article was originally published by The Shelby Report and can be viewed here.
We don’t often think of the grocery industry in terms of rapid shifts in either consumer behavior or technology. Consumer demands and expectations evolve naturally over time, and grocers adopt technologies to keep pace which those expectations. But recent events, namely, the appearance and spread of COVID-19, have presented grocers a radical change in shoppers’ behavior, and their ability to adapt to such a massive shift has depended largely on the flexibility of their retail technology systems.
Since just before the onset of shelter-in-place and stay-at-home orders in the United States, online orders with TRUNO customers have skyrocketed – increasing in volume by more than 12x from mid-February to early April.
To be certain, the rapid onset of the coronavirus pandemic is anything but business (or life) as usual. Yet food is life, as the saying goes, and it is critical to keep grocery stores open and operating so citizens can continue to eat and function until the crisis passes. And that means people must stay at home and have minimal interaction with large groups of people whenever possible.
Find out how TRUNO's integration helps grocers deliver even amid a rapidly shifting landscape.
TRUNO’s customers know that we’re here to support them using all the experience and technology at our disposal. Some of that technology has provided insights into just how rapidly customer shopping habits have changed. Traffic data from our TruCommerce integration platform, for example, showed an average increase in order volume of 9.36x growth from February to March, and 12x from February to April. That increase in orders is entirely from alternate shopping and checkout options, including mobile checkout, curbside grocery pickup, as well as home delivery services. And the volume continues to rise.
While we hope the current crisis and its effects on society will be as short as possible, it’s likely that some changes we see in consumer habits will stick around. So, just how radically is COVID-19 re-shaping the grocery landscape, in terms of customer behavior, store operations, staffing and technology?
#1 How will COVID-19 impact on restaurants flow into grocery?
Across the United States and the world, eateries have closed their dining rooms to reduce large gatherings of people in enclosed spaces. With various shelter-in-place orders in force, more consumers are eating at home. For some, that means ordering take-out or delivery from their favorite restaurant. For others, it means buying more groceries and cooking at home.
Besides shifting resources to pick up, takeout, or home delivery models, restaurants are quickly adapting in other ways. Some restaurants are meeting home cooks and restaurant diners halfway with ready-to-cook meal kits and even providing mini-grocery stores and farmers markets. For example, Panera Bread, a large national restaurant chain, just recently deployed “Panera Grocery” where restaurant patrons can also pick up limited assortments of grocery goods from their stores.
Many grocery stores had already started this trend by shifting some prepared-food production to ready-to-cook alternatives. In a combined response to COVID-19, grocers like Texas-based HEB are even making dishes from local restaurants available in their stores. When the current crisis passes, grocers will be set to provide consumers with groceries, take-out, and ready-to-make items, all purchased at a single source—and even more convenient when delivered via curbside grocery pickup or home delivery services.
#2 How does this affect the future of self-service food items?
Many groceries already provide a variety of self-service items for purchase, including salad bars, fresh soups and pastas, and bulk items like nuts, grains, and coffees. However, consumers will likely never feel quite the same when it comes to cleanliness and sanitation. Whether or not governments mandate changes to handling such items, it may be that customers demand them.
What does this mean for self-service foods in stores or even—taken one step further—the produce aisle? After all, food regulations don’t allow shoppers to select and bag their own fresh meats and dairy, so the current crisis might well herald changes to how we purchase other non-packaged foods. Despite the CDC pronouncement that there is no evidence to support transmission of COVID-19 via food, even grocery giants like Whole Foods have had their salad and soup bars, pizza stations and other serve-service venues shut down for weeks. Perhaps in the near future, grocery stores will install “vending machines” in place of self-service station, allowing customers build their own salads, package up their soups and pastas, or even dispense their own bulk foods, all without ever touching the food.
#3 How do such events impact a grocer’s supply chain?
Faced with forced work-from-home and shelter-in-place orders, workers aren’t able to stop by the store for a few items on the way home from the office. Even though shopping for groceries is considered an “essential” activity, customers are wisely not spending an hour or more in stores full of people. As a result, behavior quickly shifted from shopping for two to three days at a time to stocking up on two weeks of staples.
In fact, by monitoring our TruCommerce statistics, we saw that by mid-March grocers were selling two to three times their normal daily volume. Some grocers reacted by overordering, which in turn created shortages at the wholesalers. Although some items remain in high demand, things are already starting to level off.
One interesting observation is that after weeks of uncharacteristically large orders, the trend for online ordering reversed. Over the month of March, basket size has dropped by almost 40 percent, while the overall order volume remains nine times higher. As shoppers become more used to ordering online—albeit by necessity—they're buying fewer items at a time to replenish their pantry. In short, while they first stocked up on staples, now they need more tomatoes or milk or bread—and they are using online shopping to get them. The good thing is that—aside from some packaged items and those with long growth cycles such as meats—many stores report the overall supply chain has bounced back for most items.
#4 What affect will it have on labor and company culture?
While many businesses have suspended operations or instituted work-from-home policies to curb the spread of COVID-19, grocery stores must stay open so people can put food on the table. But the shift in shopping habits means staffing, scheduling, and job responsibilities are changing regularly. For example, with more online shoppers, stores may need fewer front-end cashiers but more staff filling the orders.
Frequent changes to shifts, store hours, and assignments mean grocers need efficient communication to keep everyone up to date. It may even push them to use technology like messaging and automated alerts that they previously had not. As evidence, we’ve monitored an 1100 percent increase in messages sent between retail managers and their employees using our labor management solutions. More retailers are utilizing the built-in functionality of their scheduling software to work like a phone tree, notifying staff of current and changing events.
As for the labor force itself, the crisis has had some interesting side effects. First, grocers are honoring essential staff as the heroes they are, often with wage increases. Second, grocery stores notoriously struggle to hire and keep good employees, but suddenly there are up to 10 million unemployed workers available to help stock shelves and fill online orders. Third, adding employees, changing new stores hours, and modifying shifts to keep up with demand, grocers are now facing new challenges in optimizing the schedule and logistics—not to mention managing employee health concerns.
#5 How can grocers scale and continue delivering what customers need during major shifts?
A crisis can result in a sudden shift in customer needs and behaviors, as well as the way it impacts a grocery supply chain and its labor force. But whatever the cause, it also makes it imperative that grocers can quickly understand, adapt, and scale to meet customers’ needs, both at the moment and in the future. To do that effectively, they must be prepared with flexible retail systems and technology.
As mentioned before, TRUNO’s TruCommerce integration platform provides us comprehensive metrics about store operations, which means TRUNO is in a unique position to help our customers identify trends and react to situations. For example, the data revealed shoppers first doubling and tripling their order sizes, then a nine- to 12-time increase sales order volume with a slight reduction in basket size. Without a tight integration of the various systems via TruCommerce, obtaining timely insights like these would require costly manual reconciliation of the data, assuming the data was readily available at all.
As retailers shift their stores to meet the online world, they must consider how they will integrate new technologies with their existing software in order to protect their operations, improve fulfillment, and ultimately create a satisfying online customer experience.
Those grocers whose e-commerce and online shopping experiences were seamlessly connected with their inventory and point-of-sale systems are able to scale alternative shopping and checkout options to meet the current demands. And future demands, too, since it is unlikely the surge in e-commerce and online shopping will disappear. In fact, a recent Shelby Report shows 97 percent of first-time online shoppers will continue in the future. With TruCommerce, TRUNO delivers integrated retail solutions that let grocers scale to meet the demand, during this critical time and into the future.
TRUNO and TruCommerce lets grocers adapt and scale operation to a rapidly changing landscape.