A month into the lockdown, an Englishman, a Frenchman and an Italian go on Amazon to shop for groceries. The Frenchman buys coconut oil and pasta ingredients, the Italian stockpiles on coffee, whilst the Englishman gets toilet paper and vodka.
Joke and cultural differences aside, the coronavirus pandemic marked a surge in online grocery shopping. Shoppers took their spending online as the lockdown measures tightened: in the UK, the traffic to Ocado increased by 194% in March versus February1, whilst in France the already popular Carrefour has seen an increase of 72%2 in online shoppers. Across the pond, Instacart reported an increase in order volume of 150, whilst new downloads of its app have multiplied sevenfold.3
Grocery retailers responded differently to the crisis – Ocado is allowing access to website only to their existing customers, Amazon warehouses are now accepting only essential supplies, whilst Aldi has stepped up its game and started selling online for the first time – the Aldi Food Parcel containing 22 essential products, all belonging to the brand’s private labels. But whilst retailers struggled to meet the demand, grocery brands saw themselves dealing with a scenario that wasn’t supposed to happen until maybe 2025: online grocery shopping was finally taking off.
Being agile suddenly wasn’t just a buzzword in the marketing playbook, but became the key differentiator between the brands who were prospering and the ones who were left behind. So how can grocery brands respond to this shift towards online shopping?
1. Flexible product portfolio
There is no surprise that people are stockpiling – from toilet paper to flour, products with a long shelf life and household items are being bought in bulk. A quick look at Amazon’s best sellers in grocery proves that pack sizes have considerably increased: 12x cans of tomato sauce, 25x flour bags, 84x toilet paper rolls, 6x cleaning spray bottles. At the same time, there is only so much room in the cupboard, so stockpiling will probably plateau soon, but shoppers will still want to make sure that they are not running out of products, so save & subscribe models will be taking off. Brands need to keep their product portfolio flexible and serve different shopping behaviours: buying in bulk, buying a smaller pack as a one-off or buying through a subscription basis.
2. Bundle up
There is no official statistic around it, but probably one in five Instagram posts feature some kind of homemade dish: from banana breads to spaghetti carbonara, it looks like we are all (re)discovering our pleasure for cooking. Brands with wide portfolios can easily capitalize on this trend and offer bundles that combine the essentials for various dishes and label them as kits: a bundle of white flour and yeast becomes a bread kit, a bundle of pasta, canned tuna and canned sweetcorn becomes a tuna pasta bake kit.
The demand for household cleaning products is also on the rise: in the U.S., multipurpose cleaners have seen an increase in sale of 148% as of March 2020, whilst aerosol disinfectants’ sales have increased almost fourfold.4 Brands are reacting by creating home cleaning kits that bundle up various products – Reckitt Benckiser is selling an ultimate home cleaning kit that brings together five of their most popular brands. Price will also be key – 46% of US consumers said they plan to reduce spending in the coming weeks5, so the price of the bundles should be slightly reduced and make financial sense for the buyers.
With traditional supply chains under strain, some of the grocery players have quickly adapted and forged partnerships with delivery services. In the UK, alongside its Essentials store, Deliveroo has partnered with Marks & Spencer, Morrisons and Co-Op to deliver groceries straight to your door. Smaller, specialized retailers have also listed their inventory on Deliveroo and allow locals to order through the app, such as Eataliano in south west London. It’s easy to imagine how brands can set up their own Deliveroo Editions store in densely populated areas and capitalize on local demand.
The crisis has also made room for new players – Grocemania, a start-up based out of the Kingston Business School in London aims to become the fastest and most cost-effective on-demand grocery service in the UK.6 At the moment, it offers products from smaller grocery chains to customers in London and Brighton and positions itself as a platform that services small to medium sized retailers. It remains to be seen how many of these initiatives will thrive in the aftermath of the pandemic, but repeated behaviours tend to be stickier, so we expect people to continue shopping online for their groceries. Early lessons from China suggest that between three to six percentage points on online market will be sticky.7
How can brands prepare? The obvious reason would be an impeccably optimized supply chain, excellent relationships with retailers and a strong direct-to-consumer presence in a vertical that was traditionally resistant to change – but that’s easier said than done. The capacity to adapt easily, a test and learn mindset, creative go-to-market strategies and an understanding on how people shop will go a long way in allowing brands to survive in the next normal.
3 Eater, New York