COVID-19 will redefine grocery shopping and food service.
Convenience now has a different meaning. It’s less about saving time and more about survival and safety. Before the crisis, barely anyone ordered online and many Canadians wondered why someone would ever order food in that fashion.
But many things are changing – rapidly.
The in-store shopping experience, for one, is changing quickly to meet the new standards.
Most grocers have reduced shopping hours to give employees a rest and allow stores to be thoroughly cleaned, from counters to carts, cashiers’ machines to self-checkout counters. Plexiglass barriers at checkouts are being installed. Grocery stores are now expected to be as clean as hospital operating rooms. That comes at a cost.
Grocers are also limiting the number of people in stores at any time and getting customers to shop within a limited time. This is shopping under pressure for the betterment of society.
Grocers basically don’t have much of a choice.
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And grocers need to pay employees more to work under these conditions. While 500,000 Canadians got laid off last week, Loblaws and Metro announced pay increases for employees.
For many years, the industry wanted to make the in-store experience more pleasant, less stressful. COVID-19 is changing all of this.
According to a report released by Dalhousie University this week, only 24 per cent of Canadians are comfortable with the idea of grocery shopping. So more than three-quarters of Canadians see the grocery store as an inherent risk.
Selling to someone who is concerned about their own health as they visit your facility isn’t good for business.
Retailing has always been the most hazardous part of the entire food chain, given that everyone has access to the products, unlike farming or processing.
So Canadians are applying risk self-management.
As a result of the COVID-19 outbreak, nine per cent of Canadians are shopping for food online for the first time, according to the same Dalhousie survey. That may not seem like many people but keep in mind that 1.5 per cent of all food sales were conducted online before the crisis.
That percentage had already begun to grow higher but COVID-19 will likely accelerate the pace.
In the United States, some changes are already happening. Downloads of Instacart, Walmart’s grocery app and Shipt increased 218, 160 and 124 per cent respectively last week over a year ago.
Grocers are already having difficulty keeping up.
COVID-19 is different in many ways to other disruptive events in our lives. But humans are creatures of habits. So it takes time to change our ways – especially with food.
COVID-19 may provide the time needed to change how we purchase food. Public health officials believe social distancing could last for months. This isn’t your typical storm, where lives are disrupted for a few days, or a week or two. A period of months can be enough to create habits, such as shopping online.
With crises and disruptions come opportunities for the food industry to adapt to changing consumer needs more quickly.
Over the last few years, the industry has slowly gained an online presence to counter the Amazon menace. But it was all about Amazon. Now, purchasing online is all about safety.
Before Amazon, foot traffic was the one metric grocers looked at carefully. Those days are long gone. COVID-19 is a powerful reminder of how fragile business models can be.
The circumstances are similar in the food service industry. Restaurants either served patrons in-house or delivered by managing delivery crews. Food delivery apps changed all that – and even more Canadians are using them since the start of the COVID-19 outbreak.
COVID-19 has the potential to be as disruptive to the food retail and service industries as the Green Revolution was to agriculture.
The Green Revolution made agriculture more adaptable to modern food consumption trends. Since its beginning in the 1950s, the globe has five billion more occupants and the percentage of people who are food insecure has dropped significantly.
The Green Revolution made the entire sector more efficient, smarter, and more immune to threatening diseases and other socio-technological threats.
The Green Revolution has been far from perfect but consumers have all benefited from it, whether we recognize it or not.
Food distribution through different technologies won’t be perfect either but it will make food distribution more compliant to our modern reality.
When brick-and-mortar location becomes secondary, a business’s path to success in food distribution changes dramatically.
The transition from traditional agriculture, with inputs generated on-farm, to the Green Revolution, requiring the purchase of inputs, led to the widespread establishment of different credit processes. An entire new eco-system was built to support agriculture.
With COVID-19, we may see the rise of dark or ghost kitchens in food service, allowing anyone to start a company, virtual or not. The establishment of more micro-fulfilment centres or dark warehouses to support grocers and other food retailers will redesign the entire sector.
This doesn’t mean Canadians will stop visiting grocery stores, farmers’ markets or restaurants anytime soon. But in five years or sooner, we could see 20 per cent of all food sold online or through apps, restaurants and retail combined. That’s potentially more than $50 billion worth of food. According to estimates, that market represents $7 to $9 billion now.
What was often seen as a far-fetched concept just a few years ago appears to be likely now because of COVID-19.
Dr. Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.
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