Shopping Moves Online, Groceries Dominate During COVID-19 Outbreak

3 min read
Apr 1, 2020
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The retail industry is in a dark place. A recent article on Modern Retail confidently stated, "This is an apocalypse," after resisting such a label for the big shifts in retail prior to the coronavirus outbreak. The only possible exception to this gloom is large grocers. Demand for household essentials is up. Consumers are increasingly buying those items online for delivery or pickup. While recent data show March to be the biggest month ever for some grocers, what comes next is unclear.

Walmart is the biggest employer in the world, with around 2.2 million employees. So when the company announced on March 19 that it would hire 150,000 more workers by the end of May, it was clear that something big was happening. Just a few days before this, Amazon had announced its own hiring spree, which we wrote about. At the time, many suspected that demand would go up for many products, but the scale of the increase wasn't clear. The data is finally catching up, so we know a little more about why companies like Amazon and Walmart have been scaling up so fast.

Nielsen, a marketing research firm, reported that total US sales of consumer packaged goods (CPG) increased by $8.5 billion for the two weeks ending on March 21. This was a 15 times larger increase than they would expect for a typical two-week period. Adobe, using data from their Adobe Analytics software, reported a 62% year-over-year increase in online purchases with in-store pickup. Online sales with delivery are also up. Adobe reported a 69% increase in online sales of canned goods, for example.

Given such increases, which retailers themselves probably knew about before the general public, it makes sense that giants like Walmart and Amazon are adding staff. Other large supermarkets have seen similar jumps in demand. In the UK, Sainsbury's and Tesco showed record sales for March. Tesco has had to add online delivery capacity to keep up with demand.

The question is how long demand will stay high and if these new online shopping habits are here to stay. It's hard to say for now, but a transformation of the retail industry caused by the COVID-19 outbreak is a certainty. As Modern Retail notes, many retailers, big and small, are likely to go under. Many have built their businesses on offering experiences to shoppers that walk through their doors. How long will people avoid crowds and public places after forced social distancing is over? The answers will shape the balance of online and offline retail for years to come.

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