Among the startling revelations emanating from the coronavirus (COVID-19) outbreak has been how rapidly food consumption patterns in the United States can change. Observers of trends in food-at-home versus food-away-from-home consumption know away-from-home dining has gained share steadily, at a glacial pace, over the past several decades. That the eating-at-home share would over the course of a few weeks jump to 80% from just under 50%, as estimated recently by Credit Suisse, was unimaginable before the pandemic.
Also moving slowly before the pandemic was the rate of growth of online shopping for groceries. Certainly, interest in the subject has been growing, particularly since Amazon acquired Whole Foods Market in 2017 as well as since Walmart Stores, Inc. stepped up its investment in the digital side of its business. Still, nowhere near 10% of groceries were being purchased online at the start of 2020, and that threshold had not been expected to be breached for several years.
Online shopping on Amazon, Walmart and Costco has been surging since the beginning of March. Whatever the impediments that had kept consumers from using their computers and portable devices for grocery shopping, the ability to shop while social distancing has had appeal. How the longer-term trajectory of online shopping will change as a result of the pandemic stands as an important question for grain-based foods to consider as they look beyond the near-term challenges they face.
March was not a month of unvarnished success for online grocery operators. Toilet paper has been in short supply from online markets, just as it has been at supermarkets.
Amazon is second only to Walmart as the largest employer in the United States, and the online giant has struggled with labor issues. Absences at warehouses have been blamed for shipment delays, and workers at Whole Foods, exposed to elevated risk of infection, staged a “sick out” last week, seeking hazard pay and other benefits.
Similarly, the online supermarket specialist Ocado has been subject to heavy criticism in the United Kingdom for its inability to keep pace with surging demand associated with the pandemic. On March 20 the company, which is rapidly establishing a US foothold in partnership with Kroger Co., was forced to shut down its website for a day after it was inundated with 100 times the normal level of orders. The company’s chairman, in an interview with the British Broadcasting Corp., implored the public to curb its buying. “There is a billion pounds more food in people’s larders than there was a couple of weeks ago,” he said. ”What are they doing with it? How much food do you need to eat? How much do you need to store away?” Even before the outbreak, the company had been handicapped in its efforts to keep up with demand by a 2019 fire that destroyed one of its fulfillment centers.
Simon Duke, a columnist with The Times of London, called the pandemic a potential “defining moment for online retailers” but said the crisis “exposed worrying limitations in Ocado’s business model” that “struggles to respond to unforeseen spikes in demand.”
If the ability to respond to demand surges determines the success or failure of online grocery shopping, Amazon and Ocado may not succeed. But the pandemic will not last forever, and there is every reason to believe consumers’ future choices for their groceries will be driven principally by convenience, quality, selection and price, day after day, month after month.
Even if customers at Ocado, Amazon and Walmart have been put off in recent weeks by delays or an inability to place orders, it’s clear the profile of online food retailing has leapt ahead because of the coronavirus outbreak. To date, shelf-stable products have been better sellers online than fresh products like produce and meat. How semi-perishables like fresh bread are positioned remains an open question. In a landscape changing at an accelerating pace, it’s a question bakers need to answer affirmatively, and soon.