While the consumers have been cutting back on most of their purchases during the COVID-19 outbreak, grocery retailers are winning out. The overwhelming demands for grocery shopping which started with ‘panic buying’, now appears as a logical consumption strategy to survive in the lockdown. The impact in consumer sentiment is highly noticeable in the grocery retail industry across the world.
Lately, consumers have focused on spending on necessary products such as groceries, household supplies, and hygiene products while cutting back on luxury products such as personal care products, accessories and out of the home entertainment.
With staggering demands for groceries, the shifting pattern in consumer preferences about online orders can be observed. Consumers who have been skeptical about buying online in normal times are now forced to change their habits owing to lockdowns. Online business platforms have been finding this changing buying behavior promising for the growth of their industry in the post-pandemic world.
This is especially true for a middle-income country like Bangladesh, as the country has seen skyrocketing demands in supermarkets and online grocery platforms since the lockdown. The digital grocery platforms in India have also mentioned double profits amidst the pandemic. In summary, the COVD-19 pandemic has pushed the global grocery retail industry to experience digital disruptions and adapt to a rapidly transitional phase.
Global Grocery Retail Industry: Consumers Shifting More Towards Digital
The food retail industry in the USA worth USD 5.46 trillion has been significantly impacted during COVID-19 as the consumers have been spending differently. Fueled by panic buying, spending on groceries had dramatically increased just before the lockdown. Sales had spiked in these categories as people started to stockpile non-perishable food, hand sanitizer and toilet paper.
Incorporating the Western concept of the organized retail industry, in 2001, Agora was the first retail chain opened in Bangladesh, later followed by Meena Bazar and Swapno. With the rising purchasing power of the people, the organized retail sector has been growing at an annual growth of 24% earning BDT 2,300 crore (USD 269 million) in 2019. However, the industry is looking forward to promising growth in the coming future. As COVID-19 has attracted a wider customer base towards sumarkets who would supposedly stick to this convenient mode of shopping even when the pandemic ends.
The global retail industry too has witnessed a shift in the importance of digital interactions in customer behaviors in recent years which became even more significant amidst the pandemic. Switching from traditional sales interactions, consumers are becoming more comfortable to make digital-enabled sales interactions.
Crowds at Online Delivery Platforms
This shifting pattern is further reflected in the mounting grocery delivery services, with consumers spending 558.4% more in April 2020 compared to last year. Based on consumers’ worries about visiting brick and mortar shops, the grocery delivery applications have seen an astounding surge in demand. Large retailer companies including Walmart, Instacart, Shipt have seen downloads of their grocery delivery apps to attain escalating growth in mid-March owing to lockdowns.
The accelerating growth of the online grocery channel is not the scenario of the USA only but can be vastly noticed in Asia as well. In comparison to before and during the pandemic, online grocery channels in China have observed increased frequencies in visits and a spike in sales.
Other Asian countries including South Korea, India, Thailand, etc. have also experienced higher frequencies in online shopping during COVID-19 while Chinese consumers remained ahead. The bigger numbers in the online visits indicate an auspicious future for online grocery retailers even when things go back to normal. Looking at Bangladesh, the concept of online grocery delivery was at a nascent stage. However, the COVID-19 outbreak worked as a boon for the sector as consumers started preferring contactless shopping to avoid being exposed to the virus.
COVID-19: A Boon for Bangladesh’s Organized Retail Industry
While most people from the middle-class would prefer traditional mom and pop stores over supermarkets, the scenario has changed during the pandemic. As gathering in kitchen markets has become extremely risky, supermarkets appeared to be a safer alternative for essential grocery shopping.
The supermarket industry comprising more than 250 outlets across the country, has reported a 50% surge in sales since the Government imposed lockdowns. In March, Swapno demonstrated its sales to be doubled while Unimart, the newest entrant in the market, confirmed 40% higher sales.
Although the supermarket industry in Bangladesh covered only a 1.6% share of the total retail market worth USD 16 billion, the rising sales indicate that there is a window of opportunity for the industry to flourish in the post-COVID-19 period. Moreover, this will help Bangladesh to catch up with the regional contemporaries as the country significantly falls behind.
Rising Online Grocery Delivery Platforms
Chaldal was already an established online grocery delivery platform before the pandemic which has seen the average number of orders becoming double amidst the lockdowns. Khaas Food was also a familiar name in the online staple market that also experienced a spike in orders.
As people started hoarding, Chaldal has limited the number of orders of eggs, rice and hand sanitizers to ensure equal distribution. Other big e-commerce platforms including Daraz, AjkerDeal, Priyoshop, Bikroy Sheba.xyz and Delivery Hobe also joined in the grocery delivery market.
The largest e-courier service Pathao has relaunched its ‘Tong’ service. Moreover, the largest super-shop chain Swapno has partnered with Pathao and Foodpanda to deliver their products. Meena Click was an existing online delivery service of Meena Bazar currently collaborating with Shohoz. Furthermore, ‘K-bazar’ is an innovative grocery delivery channel launched by Kotha, a lifestyle application that brings its products directly from farmers.
While all of these grocery delivery platforms have been tumbling under the immense pressure of staggering demands and disruptions in the workforce, Hellotask emerged with a unique business model. In this initiative, apartments’ basements are being turned into grocery stores allowing only the apartments’ dwellers to buy from them. However, the delivery services have been struggling hard to cope with the shortage of workers and earn the confidence of the consumers.
Preparing for the Next Normal
While it is definitely a positive indication for supermarkets and online grocery platforms to evidence consumers switching to these modes of buying groceries, retailers must ensure the highest convenience to make their customers stick to them after the pandemic. In order to maintain stable growth in post-pandemic Bangladesh, the industry can pursue several pivotal measures.
- To reduce current pressure and simplify operations, stores can reduce product ranges and prioritize the availability of those that are most in-demand to ensure the store sustains through the crisis. Advanced analytics should be used to forecast the demands in the future and restock products according to that.
- Mandatory hygiene and customer interaction protocols should be strictly enforced in the physical stores even after the lockdowns are lifted to protect both the customers and workers from the risk of being exposed to the virus.
- Small brands should focus on building a smart and resilient supply chain system and forming strategic acquisitions to expand the portfolio by working with resourceful adjacent players.
After the pandemic, consumers will increase their spending on other products besides groceries. With appropriate promotional activities, the retail industry can stimulate demands for these items. Therefore, supermarkets should emphasize strengthening their online platforms by creating a larger ready-trained workforce to boost the acceleration of e-commerce and digital shopping in the post COVID-19 Bangladesh.
- Total retail sales in the United States – Statista
- How U.S. Consumers are Spending Differently During COVID-19 – Visual Capitalist
- Grocery delivery app download growth due to coronavirus (COVID-19) pandemic – Statista
- How Chinese consumers are changing shopping habits in response to COVID-19 – McKinsey & Company
- Supermarkets: The future of retail – The Business Standard
- Online grocers fail to seize the day during biggest opening yet – The Daily Star
- COVID-19: Online grocery platforms to benefit as consumers flock to shop online – Business Today