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Coronavirus: Grocers scrambling to update online and delivery propositions

The supermarkets have effectively become the fourth emergency service as the Covid-19 coronavirus crisis takes hold, aided by significant online and delivery changes

Sainsbury’s CEO, Mike Coupe, is one of several UK supermarket bosses keeping in regular contact with consumers as the Covid-19 coronavirus crisis rolls on, updating shoppers with continual changes to the retailer’s proposition.

In Sainsbury’s stores, and those of some of its rivals, NHS staff, the elderly and the vulnerable have been given their own dedicated times for shopping to ensure they can find the products they need, but new online measures have also been introduced.

On 22 March, Coupe announced how Sainsbury’s is working to introduce priority online delivery slots for elderly, disabled and vulnerable customers, illustrating some core customer segmentation tactics using the data at the company’s disposal.

“We have been able to identify a number of customers as elderly and vulnerable based on the information they have given us previously,” Coupe wrote to shoppers.

“These details would include date of birth and if you have ever used our vulnerable customer helpline. For all of these customers, we will email you today with information on when slots will become available.”

Sainsbury’s has also written to some of its most loyal online shoppers, telling them that they – where possible – will be prioritised in terms of delivery slots. Online-only grocer Ocado announced earlier in March that it was prioritising its existing members, after an unprecedented spike in volumes caused a serious backlog of orders and online performance issues.

“We are also working as quickly as possible on an option for people to register themselves as disabled and vulnerable on their online shopping accounts,” Coupe added.

Supermarket sweep

In recent weeks, grocers have seen a huge surge in customer numbers, as well as the volume of items requested. This was partly prompted by suggestions the UK was heading towards government-advised lockdown to help prevent the spread of the disease.

Aside from showing society’s more negative traits, the panic buying in stores and unprecedented online order volumes illustrated the key role supermarkets play. And now prime minister Boris Johnson has ordered the closure of all non-essential retail stores, but has kept grocers and pharmacies open, their importance is highlighted further.

Competition law has been tweaked to allow supermarkets to work together more closely, and to share data, depots and delivery should they find it useful in helping feed and supply the nation with essential produce.

UK business secretary Alok Sharma said: “In these extraordinary and challenging times, it is important that we remove barriers to our supermarkets working together to serve customers, particularly those who are elderly, ill or vulnerable in all parts of the UK.”

The major supermarkets in the UK have also pooled together in an attempt to ease shoppers’ concerns, saying that if everyone follows their normal purchasing behaviour, there will be enough supplies for everyone. Most supermarkets have introduced limits on how many of each product consumers can buy.

“We would ask everyone to be considerate in the way they shop,” said an open letter published in the mainstream press, signed by Sainsbury’s, Co-op, Lidl, Tesco, Aldi, Waitrose, Marks & Spencer, Asda, Iceland, Morrisons, Ocado, and Costcutter.

“We understand your concerns, but buying more than is needed can sometimes mean that others will be left without. There is enough for everyone if we all work together.”

Susan Barratt, CEO of IGD, a grocery industry training and research body, says: “We will continue to bring industry and government together, doing everything in our power to support the right decisions being taken at the right time, to ensure that the food and consumer goods industry continues to provide for the British public.”

Digital and delivery demand

In the prime minister’s address to the nation on 23 March, he suggested people should use home delivery wherever possible in an attempt to reduce people mixing and potentially spreading the virus.

But how robust are UK supermarkets’ supply chains and delivery networks?

Asda, Tesco, and Morrisons are among the supermarkets to announce significant recruitment drives in the midst of the pandemic, with Tesco looking to hire 20,000 temporary staff alone to help meet customer demand over the coming weeks.

There has been a key focus by retailers on procuring new delivery drivers to get products into stores quicker, as well as to support the growing demand for home delivery.

But with Ocado’s website taken offline for a period, customers of various grocers reporting online orders arriving with significant gaps, and delivery slots often only available weeks in advance, more infrastructure changes will be necessary to cope with what has been greater than Christmas demand but without the planning in place.

Nick Lansley, an innovation consultant, and part of the team that took Tesco online in the mid-1990s, says: “Supermarkets are looking at grocery home shopping orders placed for future days and using the data to add to deliveries reaching the store for those days. This way they can increase capacity, and guarantee availability by keeping back products required for home delivery.

“Supermarkets have created ‘essentials’ lists which are substituted no matter what the customer says, should the actual brand or size be unavailable. Milk, bread, nappies, pet food, toilet rolls, some medication such as paracetamol, some fresh produce, and a few others fall into this category. You may not get exactly what you ordered, but you will get these essentials.”

Waitrose is leaning on its relationship with John Lewis, and many of the latter’s staff are being deployed to help its sister organisation.

More than 2,000 John Lewis partners are now working in Waitrose shops to assist with the unprecedented demand for grocery items, but this could increase as the health crisis escalates. Wherever possible, John Lewis partners will also be redeployed to provide additional support to Waitrose online.

“We are seeing a surging demand in Waitrose and online,” said John Lewis Partnership chairperson Sharon White, adding it could yet increase further, especially as the government gets more extreme in its messaging to ask people to stay at home.

Asda is one of several retailers including text boxes on its online order pages, so consumers can clearly state whether they are self-isolating at home and how to deliver goods in the most hygienic manner.

Grocery innovators

There is an argument grocers should have clamped down on panic buying sooner by rationing products to reserve stock for future shoppers, but there are several examples of the sector using its initiative – often digitally – to help get food to the masses.

“Our number one priority, at IGD and as a whole industry, is to keep feeding the nation, ensuring that everyone – including the most vulnerable members of our community – has access to the food and goods they need at this very challenging time,” says Barratt.

“Two food service companies are now working on an offer with the Department for Environment, Food & Rural Affairs to manage the sourcing and distribution of food parcels to the doorsteps of society’s most vulnerable people.”

Morrisons, meanwhile, was quick to market with two new food box ranges, available for home delivery only, and consisting of either meat or vegetarian offerings. The Yorkshire-based grocer has also temporarily turned off its mobile app in an attempt to protect the performance of its main grocery website.

Our number one priority, at IGD and as a whole industry, is to keep feeding the nation
Susan Barratt, IGD

In a move to help free up slots for more vulnerable consumers and those self-isolating at home, Tesco is encouraging customers who shop online to choose click & collect for their grocery shopping, or to prioritise shopping in-store where possible.

Meanwhile, automated parcel delivery network InPost, which gives shoppers an opportunity to collect or return their online orders at one of 850 QR-code operated lockers across the UK – including in Morrisons – reported a 60% week-on-week surge in usage, as consumers found creative ways to procure their goods in the midst of more stringent government measures on social interaction.

At the time of writing, the coronavirus had killed almost 335 and infected 6,650 people in the UK, with health officials expecting these numbers to grow considerably as finding a vaccine remains a work in progress. This scenario – and concerns about pressure on NHS resources as this escalates – is used by the government as justification for its strict social distancing measures.

But the impact of the coronavirus is expected to wipe £12.6bn from retail sales this year, according to a preliminary forecast by industry intelligence group GlobalData. That would represent the equivalent to more than Aldi’s total UK sales last year.

Retailers affected by the shutdown are being supported by a £330bn bundle of government loans, and a business rates freeze, but this period will undeniably be hugely disruptive and costly for the industry.

Grocers, though, are expected to see sales soar, adding £6.8bn to previous 2020 growth forecasts, according to GlobalData, whose UK retail research director, Patrick O’Brien, says: “While the food and grocery market will grow at 7.1% – the fastest rate for decades – this will not stop the overall market falling as non-food spend is forecast to drop by 8.9%.”

These are unprecedented times for society, and consequently for retail too. The grocery industry continues to play the role of the UK’s fourth emergency service as the Covid-19 pandemic gains momentum, but will need to keep innovating to meet demand.

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