Panic buying wasn’t the only reason supermarkets ran out of stock

The current pandemic has been an unprecedented event that has impacted every retail sector in vastly differently ways. At the peak of the pandemic, many physical stores experienced reduced footfall, while social distancing rules presented new and unique challenges, especially in the grocery sector which saw swarms of consumers panic buying essential items.

The hardware sector also saw larger numbers of people inspired to complete home DIY projects, while high street retailers and department stores continue to feel the impact of low shopper numbers. There is no question that COVID-19 has left a permanent mark on retail. 

As time passes and restrictions are eased (in some places), the big question is when will footfall return to pre-pandemic levels? If global trends are any indication, it will take some time for retail to recover as people (rightly) remain wary about the impact of a ‘second wave’.

While the grocery sector worked through initial staff shortages, requiring field marketing staff step in to help replenish shelves, the supply chain appears to have mostly recovered and is back on track.

Grocery will continue to deliver healthy results, evident in the increased interest in home cooking, including a surge in sales of home staples. But this trend, which saw households rediscover the joys of baking and cooking comfort food classics such as spaghetti bolognaise, also resulted in tinned tomatoes and pasta disappearing off supermarket shelves.

The impact on the supply chain

However, despite the common perception that panic buying was the cause of empty shelves, it wasn’t the only reason. The bigger issue was the sudden change to the supply chain, rather than a surge in sales.

People who were usually at work but now working from home had a knock-on effect by disrupting a product’s baseline demand. Brands and businesses work on complex algorithms that determine stock levels and manufacturing, so when something dramatic like the pandemic happens, everything is thrown out of sync.

Staying home also had a flow-on effect with a sharp rise in demand for locally produced products, as housebound consumers became more conscious of supporting Australian made produce. There has been an encouraging trend around provenance and a sense of pride in sourcing products locally. Consumers are mindful of where food is coming from and being conscious of the environmental impact of buying imported items. These purchasing habits are likely to linger for some time.

Embracing digital innovation

There is no doubt that the increased trial of and appetite for online shopping during lockdown has forced many retailers to rethink their digital approach and fast track e-commerce plans. With more consumers embracing online ordering, a trend extending to local produce and specialty shopping sites, many independent retailers have done very well through the pandemic.

As more consumers shun mass-produced items for alternative purveyors, some have now come to realise that paying for items they may otherwise have considered cost prohibitive are actually not as expensive as they initially thought and thus are now more willing to pay a slight premium. It will be interesting to see how long this trend lasts or whether people will slip back into old purchasing habits.

Looking at the bigger picture the pandemic has demonstrated how important it is to have an omnichannel strategy and the future of retail post-pandemic will continue to see more physical stores embrace digital. While many businesses were forced to shut their physical storefronts and shift their business model online, a lot were caught out and not well equipped for the sudden shift. However, many of those adapting to the times are reaping the rewards. These stores will only become better for it as they discover a new customer base that will become habitual online buyers. 

Retailers who have embraced digital adoption will have gained greater confidence knowing they can operate robustly online. This will no doubt protect them from the fate of others who have had to shut up shop and sadly may never reopen. 

Andy Kirk is CEO of Crossmark, Australasia’s largest retail marketing services company, with multi-channel expertise across grocery, mass, convenience, hardware, consumer electronics, pharmacy, and specialty retail, and serving more than 200 manufacturers and brands.

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