People still need to eat… but how they shop has changed due to COVID-19. Possibly forever

On our Securing the Future of Food platform we provide regular perspective on how the food sector is impacted by the COVID-19 pandemic. What measures do companies within the food ecosystem need to take to secure their future? And which trends - such as digitisation, ecosystem partnerships and responsible production - will be fast-tracked because of the Corona situation? For this first article we will zoom in on how food consumption and shopping behaviour is being impacted and how food players need to respond.

Market upturned

Amid the pandemic, food brands and distributors have seen some 50 to 70% of their out of home channel disappear and are scrambling to adjust their production, distribution and go-to-market strategies accordingly. Food retailers, on the other hand, have enjoyed weekly revenues normally seen around Christmas due to a combination of panic purchasing, hoarding and replacement of out-of-home consumption.

Although we expect that some of these trends are temporary (for example panic buying), others will alter consumer behaviour in the much longer term or even permanently. To understand these trends, we have collected insight into how the Chinese food retail sector has been impacted and how food players are recovering as they emerge from the lockdown. Detailed findings are provided below, but the overall conclusion is that the shifts in food consumption and online shopping behaviour are not going to unwind.

Lockdown

During the lockdown, Chinese food retailers actively promoted online shopping at their store entrance in order to reduce foot traffic in their stores and limit the potential infection threat to customers and store employees. To ensure sufficient personnel, food retailers and ecommerce players teamed up with food service companies to deploy idle personnel in picking, sorting and packaging food orders. In addition, and to realistically manage food delivery, food retailers opened up over 3,000 community pickup stations where consumers could pick up their orders.

This strategy worked. Where food ecommerce was already growing double-digit, the growth rate exploded in China during the lockdown, and up to half of this growth was attributable to new ecommerce shoppers. Many of them fall into the relatively untapped age segments of 31 to 35 and 41+.

Meanwhile, shopping behaviour changed from panic-buying to home-cooking. People started out buying large volumes of fresh produce and food staples. But as the lock-down continued, basket sizes returned back to normal and demand shifted as customers settled into home cooking. This increased demand for products like spices and baking ingredients.

Post-lockdown

Since the release of lockdown, consumers have remained hesitant to go out for dinner or drinks. Restaurants and bars are starting to open up but at a very low pace and under traffic-size restrictions. Chinese people have a digital app that warns them if they have been in contact with infected people. When this happens the person must go into home quarantine. To prevent this, a lot of people are limiting visits to populated areas, including bars and restaurants.

As such, food retail and home cooking continue to account for a high share in consumer spending. People continue to shop online for reasons of convenience, but also out of hesitance to be exposed to populated areas.