From Push Carts to Playstores: Shifting Consumer Trends in Grocery Retail Industry Amidst COVID-19

LightCastle Analytics Wing
June 4, 2020
From Push Carts to Playstores: Shifting Consumer Trends in Grocery Retail Industry Amidst COVID-19

While consumers have been cutting back on most of their purchases during the COVID-19 outbreak, grocery retailers are winning out. The overwhelming demands for grocery shopping which started with ‘panic buying’, now appears as a logical consumption strategy to survive in the lockdown. The impact on consumer sentiment is highly noticeable in the grocery retail industry across the world.

Lately, as per the data on consumer trends, consumers have focused on spending on necessary products such as groceries, household supplies, and hygiene products while cutting back on luxury products such as personal care products, accessories, and out-of-the-home entertainment.

FIGURE: Impact of COVID-19 on consumer spending in the USA
FIGURE: Impact of COVID-19 on consumer spending in the USA / Source: Statista

With staggering demands for groceries, the shifting pattern in consumer trends vis-a-vis online orders can be observed. Consumers who have been skeptical about buying online in normal times are now forced to change their habits owing to lockdowns.

Online business platforms have been finding this changing buying behavior promising for the growth of their industry in the post-pandemic world. This is especially true for a middle-income country like Bangladesh, as the country has seen skyrocketing demands in supermarkets and online grocery platforms since the lockdown. 

The digital grocery platforms in India have also mentioned double profits amidst the pandemic.[7]In summary, the COVID-19 pandemic has pushed the global grocery retail industry to experience digital disruptions and adapt to a rapidly transitional phase.

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Global Grocery Retail Industry: Consumers Shifting More Towards Digital 

The food retail industry in the USA worth USD 5.46 trillion has been significantly impacted during COVID-19 as consumers have been spending differently.[1] 

Fueled by panic buying, spending on groceries had dramatically increased just before the lockdown. Sales had spiked in these categories as people started to stockpile non-perishable food, hand sanitizer, and toilet paper. 

FIGURE: Changes in consumer spending on groceries in the USA due to COVID-19
FIGURE: Changes in consumer spending on groceries in the USA due to COVID-19 / Source: Visual Capitalist

Incorporating the Western concept of the organized retail industry, in 2001, Agora was the first retail chain opened in Bangladesh, later followed by Meena Bazar and Swapno. With the rising purchasing power of the people, the organized retail sector has been growing at an annual growth of 24% earning BDT 2,300 crore (USD 269 million) in 2019.[5] 

However, the industry is looking forward to promising growth in the coming future. As COVID-19 has attracted a wider customer base towards supermarkets who would supposedly stick to this convenient mode of shopping even when the pandemic ends.

The global retail industry too has witnessed a shift in the importance of digital interactions in customer behaviors in recent years which became even more significant amidst the pandemic. Switching from traditional sales interactions, consumers are becoming more comfortable making digital-enabled sales interactions.

FIGURE: Shift in consumer preferences towards digital-enables sales interactions
FIGURE: Shift in consumer trends show clear preference towards digital-enables sales interactions / Source: McKinsey & Company

Crowds at Online Delivery Platforms

This shifting pattern is further reflected in the mounting grocery delivery services, with consumers spending 558.4% more in April 2020 compared to last year.[2] 

Based on consumers’ worries about visiting brick-and-mortar shops, grocery delivery applications have seen an astounding surge in demand. Large retailer companies including Walmart, Instacart, and Shipt have seen downloads of their grocery delivery apps attain escalating growth in mid-March owing to lockdowns.[3]

FIGURE: Grocery delivery app download growth during COVID-19 in the USA
FIGURE: Grocery delivery app download growth during COVID-19 in the USA / Source: Statista

The accelerating growth of the online grocery channel is not the scenario of the USA only but can be vastly noticed in Asia as well. In comparison to before and during the pandemic, online grocery channels in China have observed increased frequencies in visits and a spike in sales.[4]

Other Asian countries including South Korea, India, Thailand, etc. have also experienced higher frequencies of online shopping during COVID-19 while Chinese consumers remained ahead. The bigger numbers in the online visits indicate an auspicious future for online grocery retailers even when things go back to normal.

Looking at Bangladesh, the concept of online grocery delivery was at a nascent stage. However, the COVID-19 outbreak worked as a boon for the sector as consumers started preferring contactless shopping to avoid being exposed to the virus.

FIGURE: Online grocery channel net reported behavior during COVID-19 vs before
FIGURE: Online grocery channel net reported behavior during COVID-19 vs before / Source: McKinsey & Company

COVID-19: A Boon for Bangladesh’s Organized Retail Industry

While most people from the middle class would prefer traditional mom-and-pop stores over supermarkets, the scenario has changed during the pandemic. As gathering in kitchen markets has become extremely risky, supermarkets appeared to be a safer alternative for essential grocery shopping.

The supermarket industry comprising more than 250 outlets across the country, has reported a 50% surge in sales since the Government imposed lockdowns. In March, Swapno demonstrated its sales to be doubled while Unimart, the newest entrant in the market, confirmed 40% higher sales.[6]

Although the supermarket industry in Bangladesh covered only a 1.6% share of the total retail market worth USD 16 billion, the rising sales indicate that there is a window of opportunity for the industry to flourish in the post-COVID-19 period.[5] Moreover, this will help Bangladesh to catch up with its regional contemporaries as the country significantly falls behind.

FIGURE: Retail market share of supermarkets in regional contemporaries
FIGURE: Retail market share of supermarkets in regional contemporaries

Rising Online Grocery Delivery Platforms 

Chaldal was already an established online grocery delivery platform before the pandemic which has seen the average number of orders becoming double amidst the lockdowns. Khaas Food was also a familiar name in the online staple market that also experienced a spike in orders.

As people started hoarding, Chaldal limited the number of orders of eggs, rice, and hand sanitizers to ensure equal distribution. Other big e-commerce platforms including Daraz, AjkerDeal, Priyoshop, Bikroy, and Delivery Hobe also joined in the grocery delivery market.[6]

The largest e-courier service Pathao has relaunched its ‘Tong’ service. Moreover, the largest super-shop chain Swapno has partnered with Pathao and Foodpanda to deliver their products. Meena Click was an existing online delivery service of Meena Bazar currently collaborating with Shohoz.

Furthermore, ‘K-bazar’ is an innovative grocery delivery channel launched by Kotha, a lifestyle application that brings its products directly from farmers.[6]

While all of these grocery delivery platforms have been tumbling under the immense pressure of staggering demands and disruptions in the workforce, Hellotask emerged with a unique business model.

In this initiative, apartments’ basements are being turned into grocery stores allowing only the apartments’ dwellers to buy from them. However, the delivery services have been struggling hard to cope with the shortage of workers and earn the confidence of the consumers.

Preparing for the Next Normal 

While it is definitely a positive indication for supermarkets and online grocery platforms to evidence consumers switching to these modes of buying groceries, retailers must ensure the highest convenience to make their customers stick to them after the pandemic. In order to maintain stable growth in post-pandemic Bangladesh, the industry can pursue several pivotal measures.

  • To reduce current pressure and simplify operations, stores can reduce product ranges and prioritize the availability of those that are most in demand to ensure the store sustains through the crisis. Advanced analytics should be used to forecast the demands in the future and restock products according to that.
  • Mandatory hygiene and customer interaction protocols should be strictly enforced in the physical stores even after the lockdowns are lifted to protect both the customers and workers from the risk of being exposed to the virus.
  • Small brands should focus on building a smart and resilient supply chain system and forming strategic acquisitions to expand the portfolio by working with resourceful adjacent players.

Based on the current picture of the shifting consumer trends, it’s almost certain that consumers will increase their spending on other products besides groceries after the pandemic. With appropriate promotional activities, the retail industry can stimulate demand for these items.

Therefore, supermarkets should emphasize strengthening their online platforms by creating a larger ready-trained workforce to boost the acceleration of e-commerce and digital shopping in post-COVID-19 Bangladesh.

Ishrat Jahan Holy, Content Writer at LightCastle Partners, has prepared the write-up. For further clarifications, contact here: [email protected].

The LightCastle team has been analyzing the macro and industry level picture and possible impacts wrought about by the Covid-19 crisis. Over the following days, we’ll be covering the major sectors shedding light on the possible short and long term ramifications of the global pandemic. Read all the articles in the series.


WRITTEN BY: LightCastle Analytics Wing

At LightCastle, we take a data-driven approach to create opportunities for growth and impact. We consult and collaborate with development partners, the public sector, and private organizations to promote inclusive economic growth that positively changes the lives of people at scale. Being a data-driven and transparent organization, we believe in democratizing knowledge and information among the stakeholders of the economy to drive inclusive growth.

For further clarifications, contact here: [email protected]

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