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Saint Joseph's University

Saint Joseph's University Experts Available to Discuss the Impact Coronavirus Could Have on the Grocery Industry

24-Mar-2020 1:30 PM EDT, by Saint Joseph's University

Physical distancing due to the coronavirus threat is at the root of the the online grocery delivery trend, but that doesn’t mean it, or other consumer habits adopted out of necessity, will completely go away once the pandemic has been contained, say two Saint Joseph’s experts.

 John L. Stanton, Ph.D., professor of food marketing and Ernest Baskin, Ph.D.,  assistant professor of food marketing, are available to discuss these trends and how the rise in new customers for online grocery services is also exposing weaknesses in many companies’ models. 

Customers tend to get stuck in particular buying habits and often won’t change unless something big happens to push them out of their inertia, Stanton explains. 

As an example, he points to a trend that arose during the 2008 recession: Strapped for cash, many Americans started buying private label goods — and didn’t stop, even after their financial situations got better.

“Lo and behold, people realized that private labels were really good products and wondered why they weren’t buying them all along,” he says.

The online grocery industry was growing rapidly before coronavirus — a 2019 report from Business Insider shows its market value doubling between 2016 and 2018. But that growth was coming from a small overall base. Stanton says some of the new customers will go back to their usual routine once the crisis is over, but many won’t.

“If I was the grocery industry, I’d be advertising home delivery like crazy,” he says.

“It’s really pushing the grocery delivery model to the breaking point,” Baskin says. “Stores are experiencing such a surge in those orders and they were unprepared. Some stores had advertised grocery delivery in two hours and you can no longer do that – they’re running backlogs of a day or two days.”

Amazon and a number of local grocery chains have announced plans in recent days to hire thousands of workers to help deal with the demand. But Baskin says many also need to focus on their inventory systems and how they tie into online grocery platforms, some of which are run by third parties. He notes that many consumers could be putting items in their carts that show as being in stock only to find out once the delivery comes that the goods actually weren’t available in store or had to be substituted.

“There will be some fallout from that, definitely, but I think a good amount of people will be pleasantly surprised about how easy and convenient it is to order online,” he says.

Baskin says the mass buying of certain items could also have longer-term consequences. For example, companies could stop producing certain products or more esoteric flavors of their brands in the short term so they can turn those lines over to supplying what’s in higher demand. And consumers might get used to not being able to buy those items once they become scarce.

“It takes time to switch over a product line and you can produce more if you keep making the same flavor over and over again,” Baskin says. “Once we get over the coronavirus, many of those products might stay out of stock because of the switching of production lines, and it might take an ad campaign or some sort of consumer education effort to get people interested in them again.”

While the grocery industry as a whole and some products in particular stand to gain from the pandemic, Baskin says they have to be careful about how they react.




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