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Recipe for a grocery revolution

COVID-19 shutdowns spurred new cross-industry relationships and consumer demand for new delivery methods. Some changes may be permanent

Recipe for a grocery revolution

Michelle Ervin of Annapolis, Md., wears a mask as she walks out of a grocery store in April. (AP Photo/Susan Walsh)

The sounds of rolling grocery carts, overhead music, and the occasional loudspeaker announcement are all you hear at this Tom Thumb grocery store in North Dallas. A majority of shoppers have masks covering their noses and mouths, so there’s little talking, even among employees. Red squares on the floor mark the proper “social distance” customers should observe, and yellow fliers remind customers to limit their quantities of certain items: eight yogurts, two dozen eggs, and one package of toilet paper. 

Grocery shopping nowadays can feel like a game of Capture the Flag: Get in, get what you need, get out as fast as possible. No doubt, the grocery game has changed in the wake of the pandemic. 

The fog of coronavirus appears to be lifting as states begin to reopen what had been considered “nonessential” businesses. Grocery stores have remained open throughout the crisis, but it has been far from business as usual, and experts say COVID-19-spurred buying behavior will have a long-term impact on the industry. 

Consider, for example, how the balance of food consumption has shifted. Doug Baker is with FMI, a food industry association that counts major grocers among its members. He told me that in “blue sky days” before the pandemic, Americans spent anywhere from 51 to 54 cents of every food dollar in restaurants. The majority of those meals—Baker estimates 145 if spread out over a year—shifted back to the home, putting greater demand on grocery stores.

And that has caused the wholesale-retail food dynamic to shift. Traditionally, restaurant suppliers and retail grocery stores were competitors. But under shutdown rules, wholesalers had a glut of food that restaurants weren’t buying due to decreased sales volume. And grocery stores had a need for more inventory. Baker said his group is doing “matchmaking” between retailers and wholesalers, helping food service distributors redeploy product, equipment, and labor in order to help ease some of that demand on the grocery side of the supply chain.

Meanwhile, more people have been picking up cooking skills out of sheer necessity, Baker said, and they’ll likely maintain those habits as stay-at-home orders lift. 

Sheltering-in-place orders, meanwhile, have led to new demand for grocery delivery options. To avoid illness, people have been turning to apps and online services—Shipt, Instacart, and others—to do their shopping. 

Supply chain analysts like Lane Cohee, a professor at Palm Beach Atlantic University, have monitored the online delivery trend for some time. They say the uptick in coronavirus-driven use is likely to have a lasting impact on the industry landscape. 

“For the last several years we’ve been talking about who’s going to win at the last mile of delivery of groceries to the home. And this has accelerated that consumer behavior,” Cohee said. “There are going to be people who will never go back.”

Even powerhouse retailers like Amazon and Walmart have had to ramp up their already robust delivery operations to meet surging demand. Consumer goods marketer Acosta, a Florida-based company, polled U.S. shoppers and found that more than half of those surveyed placed online grocery orders between mid-March and mid-April, with 33 percent of those orders coming from first-time online grocery shoppers. 

Unsurprisingly, coronavirus concerns have caused a drop in overall consumer spending, but grocery spending has skyrocketed. In March, grocery giant Kroger saw a 30 percent increase in same-store sales. Concerns about scarcity drove part of that. Elizabeth Lewis, a mother of four young children in Dallas, said the gray area around “shelter-in-place” compelled her to stock up on a month’s worth of groceries.

But  Lewis has been able to visit the grocery store almost weekly for fresh produce and one-off items she missed the first go-around. All of that shopping has added up. 

“It’s always expensive feeding a family of six, but stores seem to be having fewer sales because they don’t have to,” she said. Add to that bored, hungry kids, and a husband suddenly working from home full-time, and they’ve blown through that initial stock-up trip and then some. She estimates her family has spent double on groceries since mid-March. She steers clear of online ordering, since tips, delivery fees, and product markups would strain her already tight budget. 

For all of the new innovations born out of crisis—like the expansion of online ordering—an old problem may be lurking around the corner: food waste. Preparedness is all well and good, but Baker wants to remind consumers to consider others: Remember local food banks and neighbors in need. 

“As a country, we waste 27 percent of the food we bring in our homes,” he noted. “There is a good possibility waste will go up because we over-purchased.”

Katie Gaultney

Katie Gaultney