Delivering on the “Last Mile”

Many “norms” in how we purchase and eat our food have been well and truly turned on their head in the past few weeks as our habits have changed abruptly, and of necessity, as a result of the pandemic.

Eat-in restaurants have become takeaways. Delis are offering drive by and delivery shopping services. Artisan producers have been scrambling to get a direct to consumer offer up and running. Everyone in the business is ramping up their online presence and looking at new and different ways to reach their customers.

It hasn’t been all plain sailing for the food retailers either. Tesco has already flagged that extra costs to the business this year will be close to £1bn across its operations in Ireland and the UK. This is due to the reduced numbers allowed in stores, extra staff costs in overtime and bonuses and the cost of servicing online sales.

With people now queuing for up to an hour or more to get into supermarkets at busy times, shopping trips are no longer trivial affairs and are being kept to a minimum in most households. Top-up shopping trips in convenience stores are anything but convenient when they involve queuing for a prolonged period.

Add into the mix the fact that smaller retail shops don’t always lend themselves to social distancing. Narrow aisles and locations in urban locations adjacent to busy pavements can make for an uncomfortable customer experience.

While the number of actual shopping trips has greatly reduced, the amount of goods being purchased has increased substantially. In Ireland March 2020 was the biggest month of grocery sales ever recorded with shoppers spending over a quarter more than usual.

The early days of the pandemic saw, rather improbably, a run on toilet paper (no pun intended) as well as long-life cupboard staples such as pasta, rice and sauces. The prospect of an extended period indoors with young children prompted lots of would-be bakers to dust down their cook books and stock up on flour, eggs and sugar. Hungry teens needed extra snacks and sandwich supplies. And with adults being human, and also needing treats and small things to look forward to, chocolate and alcohol featured fairly prominently as well.

A few weeks into restrictions, and as shoppers realised that the food supply chain was intact and there were generally no issues with availability, spending has settled into a kind of normal or at least regular pattern.

An interesting framework developed by research company Neilsen defines different cascading behaviours throughout the trajectory of the pandemic. It’s fairly safe to predict that there will be a longish transition from the current Restricted Living stage to the Living a New Normal stage in the coming weeks and months.

abbreviated_6thresholds
Source: Neilsen

By far the biggest challenge for all players in the food supply chain however has been the so-called “last mile”. This is the final logistical stretch involving the transportation of goods from the point of sale to the end destination (people’s homes). And this has proven to be costly and problematic.

Demand for home deliveries has been unprecedented as people have sought to minimize exposure to crowded environments and the rather ardous chore that shopping has become. With demand far outstripping supply, securing a delivery slot has become equivalent to having the hottest ticket in town. Online shopping orders have increased fivefold. For those who can’t quite believe that they are queuing to get into their local Lidl on a Saturday night, the irony is not lost.

Some of the changes are – I would cautiously say – welcome. Shopping in bricks and mortar stores has, in some respects, become more enjoyable. The shops are less busy. Customers are less likely to push and barge about the place. Distancing at the check out makes for a much more pleasant experience. Perhaps because this is one of the few outside activities that people can do (currently) and everyone seems to be taking their time when they finally get in store.

What other changes might there be, in the short to medium term (and very possibly longer term), to people’s stay-at-home food habits?

  • More conscious and consistent efforts to make meals interesting with experimentation in new ingredients and recipes?
  • Increased frugality and care in food purchase and meal planning leading to a reduction of food waste?
  • Attempts to recreate the restaurant and “eatertainment” experience at home with aperitifs, cheeses and themed meals?
  • More thoughtful food choices which comfort, nourish and protect mind and body?
  • Greater emphasis on meal preparation skills, and handing over the reins to different (and younger) members of the family?
  • Takeaways – standard and new gourmet versions – may well become the ultimate weekly treat, providing a welcome break from monotony

All eyes are now on China to learn from their experiences of the pandemic. What is becoming apparent is that as Chinese people were compelled to stay at home for a lengthy period at the peak of the epidemic, the “homebody economy” has become the new normal. This reflects the ease with which people were able to shop, study, work and find entertainment online at home. Consumption trends may well have been re-shaped for the long term.

In spite of China having one of the most advanced e-commerce markets in the world, online retailers still found themselves tested and stretched in new ways during the height of the pandemic. During the quarantine, fresh food channels grew significantly, and 89% of Chinese mainland consumers have said they would be more willing to buy daily necessities and fresh products online after the pandemic. Huge efforts have been made to reduce human-to-human contact and ramp up “contactless delivery” by the deployment of autonomous vehicles or drones to deliver orders.

Here in the western world, habits which have evolved over the past few years have suddenly been quashed. People had grown accustomed to convenience, ease of access and immediate availability. For years convenience has been king and online shopping occupied a tiny (if rapidly growing) percentage of the market.

Now though, there is no doubt that on-demand delivery will continue to scale up; we’ll also see increased numbers of “smart” pick-up options; and a fairly relentless drive towards contactless. Buymie here in Ireland has reported a 300% increase in app downloads in recent weeks.

All the while, there is very much a feeling that the “rulebook” has been well and truly torn up and thrown away. Particularly when our sole comparator for the current situation goes all the way back to 1918.

As societies worldwide continue to navigate carefully and cautiously through this crisis, it is entirely possible that we’ll find ourselves in the not too distant future talking about the “old normal”.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s