Introduction
COVID-19 is changing the world we know, and all this shift is happening right now, very fast. From the beginning of March till now, society has experienced the most severe social isolation since WW2. If we look around, it is easy to notice, that the transition can be found in every work aspect. However, in this article, we will discuss fast-moving consumer goods (FMCG) and how they are affected by the crisis.
FMCG is the area every human being needs for survival. Many of us take it for granted, but the current crisis shows us how fundamental it is. Although the doctors and medical staffs are indeed the heroes of this year, let’s discuss the majority of drivers, store workers, warehouse staff and much more and how they risk their well-being every day for us, for our tours to the shopping stores.
Before we take a closer look onto FMCG, here are some fundamental findings:
- Market impact: Early crisis panic led to panic buying, but later returned to normal shopping levels. The food and grocery stores still outperform other industries.
- eCommerce impact: People started buying goods online more than ever, and most of them are believed to be converted into regular shoppers. More and more business find an escape from the crisis into digital transformation.
- Supply: Panic buying fed on people fears that supply chain will collapse and retailers will not provide FMCG.
- In-store experience: Stores adapted World Health Organization advises and reduced the customers. Measures are still ongoing and retailers will adapt for some time.
- Delivery: FMCG saw the impact immediately and most of them address delivery issues.
Market impact
The market and industries were not ready for such a collapse in sales. The worldwide disruption and lockdown lead to freefall in prices in sales just in two weeks. At some work sectors, the prices are down at 25%, in areas as tourism or restaurant industry, the downturn is by 70% and above. However, the food and grocery market is at its peak.
It is clear why the consumers are spending money only on essentials. The lockdown of almost all businesses and national emergencies all around the globe, people stay at home and normally need provisions. Consumers buy more also because of fear that the situation will affect us all for longer than expected. It is a terrifying feeling that the supply chain will fall and not-surprisingly led to panic shopping.
The purchase levels went back to normal in a few weeks due to low mobility and house isolation. However, brands as Carrefour showed data that food demand has increased by almost double. It drops back down to normal, but it is expected to stay at its peak even after the crisis.
eCommerce Impact
Expectedly the eCommerce industry has significant growth. Companies have troubles with logistics and deliveries, however, this doesn’t stop the customers to shop online more often. One of the biggest online retailers Amazon, with its grocery delivery service, is in its peak and is even looking for 100 000 new staff members, because of the pandemic.
Coronavirus outbreak made normal shopping habits unreliable and attracted new users, especially older citizens, to try online shopping for the first time. The assumption is, that eCommerce will not drop to pre-pandemic levels and will bring many more customers online. Lots of them have already seen the benefits of shopping online and will become long-term converts.
Some of the sights of high eCommerce demand are that many traditional businesses as supermarkets shift to online as a long-term strategy. Web agencies also receive a lot of inquiries for building online solutions. Even we, as a web agency, have already received inquiries about building online supermarkets, and our customers’ desire is to scale quickly across the country.
Challenges in front of retailers
The impact of COVID-19 is seen in every store. In Bulgaria, the first week of the pandemic brought empty shelves in stores, toilet-paper over-consumption, supermarket efforts to protect their staff and the citizens. A decrease in working hours and shoppers in the stores are just some of the taken measures. But what are the main challenges the FMCG companies experience:
Supply
As we discussed above, the fear that the supply chain will fall led to panic buying. However, this is not the biggest issue in the industry. In Bulgaria, the government announced that the convenience stores have the high-demanded goods in stock for 40 days. In India, the demand of hand-sanitizers and medical products led to a deficiency. But in general, the biggest retailers explained that shortages in FMCG won’t be experienced and they have sped up the supply of these goods.
A bright point is that retailers are more likely to source local goods, which helps the national economics. Rather than buying an Italian cheese, a French wine or Polish tomatoes, customers are also shopping locally.
In-store experience
The first wave of the virus was unpredictable and led to chaos. However, the lesson was quickly learned and in no time retailers started to act. The coronavirus is in almost every country and quickly spreading, here are some measures that FMCG retailers should consider:
- Make a long-term strategy on how COVID-19 affects your business. Start implementing it now, but try to foresee the future.
- Help customers order online and deliver on time in the early stages of the outbreak
- Change your advertising strategy to communicate calmness and not panic shopping.
- Get involved in social initiatives and help your national medical system
- Install plexiglass screens to protect your checkout staff
- Decrease the working hours and ensure that you have special hours only for older citizens
- Try to keep high hygiene in the store and sanitize the place more frequently than normal
- Ensure that your employees are safe
- Use contactless payment methods to stop handover of cash
- Pre-pack goods as fruits, vegetables and bread to stop customers touch every one of them
- Try to be active and clear with your communications with staff and shoppers
Delivery
Customers show demand for FMCG, retailers adapt and try to beat the crisis. Major supermarkets have already provided an online experience to their users. eCommerce shops offer Click and Collect or home deliveries. As we see, the retail business is adapting fast. Although the delivery is the last step of the shopping and showing not major problems during the crisis, there are still some obstacles.
Supermarkets are still trying to cope with the situation. The average delivery in Bulgaria is one working day, however not every supermarket provides an online experience. In the UK the problem is completely different, most of the retailers have eCommerce options, but the average delivery is 3 weeks from the time of order.
Some of the delivery advises are:
- Build a local community of younger people helping the elderly for shopping. Write a Facebook post or ask the people at your neighbourhood.
- Shops need to find a fast way of making online platform and ensure day to day deliveries.
- Businesses should unite to solve the problem with deliveries. Imagine a solidarity project between a supermarket and a delivery company.
- Small businesses can take advantage of the situation and try to transition their company online. Not-to-forget they have closed doors but can organize eCommerce experience and sale online.
These advices FMCG businesses need to embrace now and fast. Isolating the entire world is not an option, the virus should be beaten and companies need to adapt to the current situation. We can not separate everyone to save the elderly, but at the same time can not risk them. Quite a dilemma, right!
eCommerce help for Retailers
We, from Grind, believe that the future of retail is online. The eCommerce shapes the future and improves the world. Every shopping store should embrace this statement and try to provide the best online experience for its customers.
As a web agency, we have developed different eCommerce solutions and believe that our expertise can help you take your sales online. Our aim is, your business not only to survive the crisis, but to become stronger and improved at the end of it. We know how to create the best experience for both your company and your shoppers. Contact us and let’s talk about how we can make your FMCG chain digital.
