COVID-19 will forever change the food industry
COVID-19 is likely going to redefine grocery shopping in more ways than one. Convenience has a different meaning now–it’s less about saving time and more about survival and safety. Before the crisis, barely anyone ordered online and many Canadians wondered why someone would ever order food online.
The in-store shopping experience is changing quickly in the COVID-19 era. Most grocers have reduced shopping hours to give employees a rest and allow for stores to be thoroughly cleaned. Plexiglass barriers at checkouts are being installed, and grocers are limiting the number of shoppers allowed in a store at one time. This is shopping under pressure for the betterment of society.
For many years, the industry wanted to provide a different feel to make the in-store experience more pleasant, less stressful. COVID-19 is changing all of this. According to a recent report released by Dalhousie University, only 24% of Canadians are comfortable with the idea of grocery shopping. In other words, more than three quarters of Canadians see the grocery store as an inherent risk. When looking at the entire food chain, retailing has always been the most hazardous part, given that everyone has access to the foods, unlike farming or processing. In an era during which risk self-management has never been so prevailing, Canadians are beginning to figure it out.
As a result of the COVID-19 outbreak, 9% of Canadians are now shopping for food online for the first time, according to the survey. Keep in mind that 1.5% of all food sales were conducted online before the crisis. That percentage was growing, but COVID-19 will likely accelerate the pace.
Humans are creatures of habits. In time, we do change are ways, especially with food, and COVID-19 may offer us time to change how we purchase our food. Public health officials believe social distancing can last for months. Such a length of time can be enough to create online shopping habits.
With crises and disruptions come opportunities for the food industry to adapt. Over the last few years, the food industry had been increasing its online presence in response to Amazon. Now, purchasing online is all about safety. Before Amazon, foot traffic in stores was the one metric grocers looked at with extreme caution. Those days are long gone. COVID-19 is a powerful reminder of how business models can be fragile.
Essentially, COVID-19 has the potential to be as disruptive to the food retail and service industries as the Green Revolution was to agriculture. The Green Revolution made agriculture more adaptable to modern food consumption trends. Since the beginning of the revolution in the 1950s, the globe has five billion more occupants and the percentage of people who are food insecure has dropped significantly. The Green Revolution made the entire sector more efficient, smarter, and more immune to threatening diseases and other potential socio-technological threats. The Green Revolution has been far from perfect, but consumers have benefitted from it whether they recognize it or not. Food distribution by way of different technological means won’t be perfect either, but it will make food distribution more compliant to our modern reality.
When brick-and-motor business becomes a secondary factor, a business’s path to success in food distribution changes dramatically. With COVID-19, we may see the rise of dark or ghost kitchens in food service, allowing anyone to start a food service company. The establishment of more micro-fulfilment centres or dark warehouses to support grocers and other food retailers will redesign the entire sector.
This does not mean Canadians will stop visiting grocery stores, farmers’ markets or restaurants anytime soon. But within the next five years we could see 20% of all food sold online or through apps, restaurants and retail combined. That’s potentially more than $50 billion worth of food. According to estimates, it’s roughly around $7 to $9 billion right now. What was seen as a far-fetched concept by many just a few years ago, appears to be a probability because of COVID-19.