COVID-19 Effects on Grocery Business: How to Survive the Phase?

It was 2 a.m. 

I was heading towards the kitchen to have some water when I noticed that the light of the next room was still on. I slowly entered the room and saw my flatmate sitting next to the laptop with sparkling eyes. 

On asking, he said that he was thinking of cooking Pasta and Brownie for evening, but found that we do not have required ingredients. So, he was ordering all the groceries, which will be supplied to our door by next morning itself.

Hearing this, I realized how much our lives have changed with the COVID-19 outbreak. While there was a time when we used to rush to market to buy fresh veggies and fruits, along with satisfying our temptation for burgers, things have completely changed now.

Due to the fear of getting infected with Coronavirus and implementation of regulations like Social distancing, our grocery shopping patterns are changing, and so is the industry.

Taking the same into consideration, today, we will be discussing the Coronavirus (COVID-19) Effects On Grocery Business in this article – followed by where the industry is heading to.

In a hurry? Jump directly to –

1. Current State of Grocery Industry
2. Challenges Faced by the Grocery Businesses During Pandemic Period
3. Rise of On-demand Grocery Delivery – the Future of the Industry
4. How to Prepare for the On-Demand Grocery Delivery Market Successfully?

Current State of Grocery Industry

The Coronavirus outbreak has made an unprecedented impact on the global economy. It has compelled various companies to shut down or look for an alternate revenue stream to sustain in the marketplace. However, when it comes to the grocery industry, the effects of this virus outbreak is quite unusual.

While Coronavirus has created a panic state making users buy more than required items, it has also made them focus on essential goods only. An impact of which is that grocery retail industry segments like that of food and beverages, electronic shopping, health and personal care, and general merchandising is seeing a significant rise in their sales. Whereas, the motor vehicle and auto parts and food services market are experiencing devastating blows.

The virus has instilled fears in the hearts of consumers, making them prefer online grocery shopping over visiting physical stores. A result of which is that while brick-and-mortar stores and supermarkets sales have cut by significant ratio, e-grocery platforms have recorded a rise in average daily user rate by 40,000 during this global pandemic period.

Also, as per Google trends, the number of searches around grocery delivery services have increased dramatically.

Likewise, a significant surge is noted in the average daily downloads rate of popular on-demand grocery apps; making both Entrepreneurs and investors look ahead to riding on uprising Uber for X wave.

This has indicated that the offline and online grocery business streams are going in two different directions. However, it is not so. 

Various surprising elements are coming forth that are proving that both online and offline grocery domains are getting affected by the Coronavirus outbreak, though the extent is different. One of such elements is the set of challenges they are facing – a glimpse of which is covered in the next section of the article.

Challenges Faced by the Grocery Businesses During Pandemic Period

1.  Change in Business Model

The foremost challenge faced by the grocery industry is change in the business models. People, with the intent to avoid physical contact, are looking ahead to using different mobile payment apps. They are also hesitating to buy groceries from areas marked as hotspots or in crowded shops.

This is making it difficult for brick-and-mortar retailers and wholesalers to retain their customers and drive sales without changing their traditional business and revenue model.

2.  Poor Supply Chain Management

As earlier stated in our article on the impact of Coronavirus on industries, around 40% of companies including grocery retails are suffering from supply chain management issues. 

These businesses are finding it hard to plan and control their supply chain efficiently and meet the increasing demands of consumers mid of lockdown and corresponding situations.

3.  Less Workforce

Since the grocery workers have to remain in contact with multiple people during their job, they are afraid of getting in touch with an infected person and losing their lives. On the top of it, various reports have revealed the number of grocery and supermarket workers who died because of the novel coronavirus pandemic crisis. 

These factors are preventing them from going to work, which is eventually making grocery business people wonder how to manage their work with limited human resources.

4.  Delivery Delays

In most of the grocery shops, delivery partners work on a contractual basis. During this crisis period, they are not showing the willingness to work due to the fear of getting infected. 

This is again making it difficult for grocery wholesalers to deliver all the food items at the doorstep of their consumers in real-time.

5.  Transition in Consumer Behavior

Last but yet the biggest challenge faced by grocery businesses these days is the drastic change in the consumers’ demand and search behavior.

It has been reported that consumers have begun cooking 6 dinners at home on an average, compared to just 3.8 dinners weekly in 2018. 

Because of this, they are requiring more supplies of food and essential items at their place. But, to avoid multiple visits to stores, they are looking ahead to stocking up items at their place. 

A result of which is that many shoppers are not able to find 40% of the grocery items mentioned in their shopping list even after visiting the store twice or thrice. 

Besides, it has also been noticed that consumers are buying only particular items over all the fancy things, which is creating an imbalance in the internal management process. 

To mitigate these challenges and bring their business back on track, along with keeping the safety of end users and employees into consideration, many grocery stores have taken telling steps. One such step is investing in building an on-demand delivery app.

But, how profitable is this action? 

Will on-demand grocery delivery business model reflect any change in the future of the industry? 

Let’s unveil in the next section of the article.

Rise of On-demand Grocery Delivery – the Future of the Industry

On-demand grocery delivery, one of the segments of the on-demand industry that is aiding in the coronavirus fight, is slowly and gradually becoming popular.

Also, a survey by eMeals has revealed that 34% of the respondents are sending their weekly shopping list to online grocery stores or delivery services apps instead of going to their local stores. They are relying upon pickup and delivery services of Walmart, Kroger and Instacart to stay safe during the quarantine period even when they might have to face delays in grocery home delivery or wait for 2-3 days. It has also been concluded that this pattern of consuming groceries will last longer, even when this global emergency won’t exist any more.

What’s more interesting is that not only the top on-demand grocery delivery apps have improved their processes, various companies have entered this space too as a measure to prepare their on-demand business for the post-COVID world. This includes –

1.  UberEats

With COVID-19 having a direct link with food, people are hesitating to order food online. They are rather tending to getting groceries dropped off at their place. 

Considering this, Uber Eats have taken an impeccable approach to fill the business gap. The Uber subdomain partnered with France’s supermarket giant, Carrefour to deliver groceries to Paris residents in real-time. All consumers have to do is to give a call between 11 a.m. and 11 p.m. for getting groceries and other essential items including that used for hygiene and cleaning. 

Likewise, this on-demand ride hailing services provider is also planning to deliver items from pet stores and pharmacies, and delivering gas station convenience store items to people’s homes in Brazil and Spain, respectively. And this way, add more numbers to the astonishing Uber statistics.

2.  Delivery Hero

Delivery Hero, one of the reputed global online food ordering and delivery marketplaces, have also taken commendable efforts to help businesses survive this phase. It has added around 50,000 restaurants and 1,500 other verticals such as groceries and pharmacies into their marketplace in the past three weeks to deliver engaging onboarding services.

They have extended free delivery options to a wide range of targeted user base and embraced the concept of contactless delivery. In addition to this, they have also introduced additional payment cycles to support cash flow for their partnered small businesses.

3.  DoorDash 

DoorDash has also introduced a new program to deliver essential things like paper towels, cleaning supplies and medicines at doorsteps of consumers’ homes. Something, for which they have partnered with a broad range of stores in the U.S region such as Casey’s General Store, 7-Eleven, and CircleK.

4.  Zomato 

Likewise, Zomato – the brand that made various Entrepreneurs take an interest in building a restaurant-finder mobile app – has collaborated with Grofers to introduce the grocery delivery service across 80 cities in India.

Bonus: Facebook has also tied with Jio to make it possible for local grocery stores to leverage the power of WhatsApp platform for taking their business online within the JioMart platform.

Because of all such efforts and collaborations, the on-demand grocery delivery market is anticipated to grow from $36.2 Bn to $117.0 Bn between 2019 and 2023.

These numbers have given rise to Entrepreneur’s interest towards determining if this pandemic period is the right time to invest in the grocery delivery app idea. 

Assuming that you are one of those who are thinking in this direction or would love to know the next step, let’s wrap up this article talking about the things to consider to enter this market successfully.

How to Prepare for the On-Demand Grocery Delivery Market Successfully?

1.  Do Market Research and Competitive Analysis

To start your own on-demand business or take your existing grocery business online, the foremost step you need to take is to understand your market thoroughly. When you have a clear idea of what your users want, what their pain points are, what strategies existing brands are opting, and more, you can make better decisions.

So, do not overlook the need of performing an extensive market research and do competitive analysis.

2.  Invest in MVP Development

Embracing the concept of Minimal Viable Product(MVP) is also one of the finest steps towards successful entry to the on-demand grocery market. After all, it will aid you in testing the water without making a hefty investment or putting your brand’s dignity at stake.

3.  Decide the Optimal Business and Revenue Model

Since the core idea behind making an investment in the form of on-demand grocery app development cost is to earn some money, exploring different business models is also a must.

So, take a dive deeper into the market and see which business model will add more bucks to your bank account and invest for the better future.

4.  Pick the Best Features and Tech Stack

There’s no denying that it’s these features and functionalities and the technologies operating at the backend that help you to capture the attention of your targeted user base and keep them hooked to your brand services/products. So, it is imperative that you take a step towards choosing the right features and technology stack while formulating your app idea.

5.  Hire a Reputed App Development Partner

Another factor that is must to consider while planning to step into the On-demand grocery market is to hire the right developers. Implies, hiring an On demand service app development company that has an expertise and experience in creating such solutions, have received accolades from previous clients, have an engaging portfolio, have tried hands on the latest technologies, and are eager to aid you in refining your app plan and derive better perks in the future.

6.  Promote Your Application Smartly

Building a perfect mobility solution is not enough. It is again required to follow a mobile app promotion guide religiously and market your application abruptly.

So, bring your marketing team on board and discuss how to harness the power of different platforms and strategies to reach a wider audience and gain better profits.

7.  Be Adaptable

Just like Delivery Hero, Zomato, and Facebook, you must also be ready to adapt in the market. While creating short-term and long-term goals is one thing, you must also keep your inhouse team and app partner in touch to get the requisite changes implemented in your on-demand grocery delivery application quickly and efficiently.

THE AUTHOR

Dileep Gupta

DIRECTOR & CO-FOUNDER