Virus Crisis Means Grocers Must Think Out of the Box

(Bloomberg Opinion) -- Images of queues to get into supermarkets, and shelves stripped bare, are stoking fear.

Worries about the supply of food and staples do not end there. A shortage of online delivery slots is causing concern too, with people now expected to stay at home for lengthy periods. Grocers also have to address the likelihood that their staff will contract the Covid-19 illness.

It amounts to a significant operational challenge for food retailers and producers. There are, however, some measures they can take to adapt.

Firstly, it makes sense to simplify ranges. Rather than producing a selection of sliced bread, bakers can ditch the seeded wholemeal and the old-fashioned farmhouse loaf and produce just one type of brown bread and one type of white. This makes production more efficient, and minimizes the time that machinery needs to be cleaned down. There may not be as much choice – but supply would be less likely to run out.

Some firms will be faster to adapt than others, depending on their existing setup. In the U.K., for instance, Wm Morrison Supermarkets Plc makes more than half of all the fresh food it sells.

Production capacity being used to make items where demand has fallen off, say sandwiches for office workers, could be repurposed for other types of food. This won’t be instantaneous. But it is an option if changes to the way people live become more enduring.

Online grocery delivery is associated with a click of a mouse or the tap of a smartphone, but it doesn’t have to be like that. There’s nothing to stop supermarkets setting up alternative arrangements. For example, consumers could call a store, an assistant could pick the order from the shelves, and then deliver it to the customer – maybe in partnership with taxi (or car rental) firms that are being hit by a drop in demand.

Of course, this all assumes that there are sufficient staff who remain available for work if supermarkets suffer their own absences. But it is plausible that some workers could be retrained to meet the demands of a vastly expanded online grocery industry.

While it should be feasible to train drivers from, say hospitality, where they are used to dealing with customers, getting enough refrigerated vans is more of problem. Again, it’s possible that vehicles that usually deliver to the restaurant trade could be used.

Some observers have likened the hike in demand to that at the holiday season. But at least retailers can plan ahead for that. This is not about customers slipping an extra treat into the basket; the demand is for lower margin, everyday items in bulk.

There are people and physical assets in other industries that have rapidly become under-employed. They could help the retail industry, just as retailers can help themselves by rethinking precisely what they sell and what customers need. The pressure now is on management to be inventive in re-designing their model for a new reality.

To contact the editor responsible for this story: Chris Hughes at chughes89@bloomberg.net

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.

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