Preparing for Coronavirus in grocery retailing’s ecosystem
No one knows how bad the Coronavirus could get or how much it could disrupt stores, manufacturing operations, or supply chains. What we do know is the industry needs to be prepared for the worst to keep the damage to a minimum. RW3 has compiled some information and suggestions from industry experts to help our customers protect themselves against empty shelves, understaffing, risk of spreading the infection, and other issues Coronavirus could present.
Prepare for panic buying
News reports are full of stories about grocery retailers struggling to keep their shelves full of certain items as the American public prepares for the spread of Coronavirus. HEB had to limit sales per customer of hand sanitizer; stores across the country reported having to restock items like sanitary wipes, toilet paper, water, and frozen or non-perishable foods like canned soup, beans, pasta, and rice. The Washington Post reported that one Manhattan pharmacy ran out of hand sanitizer at 1 p.m. on Thursday, got another 140 bottles in five hours later, and sold them within 60 minutes. The store was also running out of sanitary wipes. “Sales of regular hand soap, though — which doctors say provides the best line of defense — were about the same,” the article noted.
Panic buying makes customers feel better when something is happening that they can’t control. The Coronavirus is an unknown. It may turn out to take fewer lives than the flu, or it might be much worse, the problem is no one knows right now. If the pantry is full of dry goods and toilet paper people feel they’ve taken action to keep themselves safe if food supplies run short or if they must be in quarantine for long periods. And panic buying begets more panic buying. When customers who otherwise were calm see other customers clearing off shelves and filling carts with dry goods, they begin to fear there will be nothing left for them, and then they do their own panic buying.
The task of retailers and CPG companies at such a time is to provide everything shoppers need—not in order to profit off the fear—but in order to calm it. Seeing empty shelves doesn’t just depress retailers, it scares shoppers who are prone to scarcity scenarios. But stores don’t have to stock up on everything, panic buying is usually limited to items that are associated with problem-solving like toilet paper, cleaners, and non-perishables. By having plenty of these items on order or in stock retailers and CPG companies can prove an ally to customers by helping them solve the problems they fear they may face.
Set up your supply chains
So far, there do not appear to be big problems with supply chains, or shortages because of Coronavirus, except those caused by panic buying. Retailers that sell a lot of imported items may have more difficulty: A number of retailers in New York, were struggling with shortages because many of their products come from around the world.
However, George Bailey, managing director of the Digital Supply Chain Institute suggested retailers and manufacturers use this situation as an opportunity to really examine whether their supply chains are ready for these kinds of unforeseen issues. Current forecasts indicate that pandemics and other major disasters are likely to increase rather than decrease. Companies have to be ready for whatever comes. Some of his advice includes:
What to do right now
- Set up a war room that reports directly to the Executive Committee.
- Establish risk exposure, especially with respect to countries with severe outbreaks that include an inspection of Tier 1,2,3 suppliers and their risk exposure.
- Develop a battle plan that takes into account Demand, People, Technology, Risk and implement your plans quickly.
- Plan how your entire organization will cope with the increasing spread of the Coronavirus to the rest of the world.
CNA Research also created a document in 2017 called “The Role of Groceries in Response to Catastrophes” that could provide guidance.
Keep your store safe
FMI is planning a webinar on Covid-19 preparedness for March 10. The company has also worked with the Centers for Disease Control on how to get ready for situations such as labor shortages at the manufacturing plant, and among delivery drivers, and store employees who contract the virus.
Their suggestions include:
- Analyze product lists to anticipate demand shifts during a pandemic (like those problem-solving products). Identify “core” items and create emergency purchase orders that can be executed when the appropriate trigger point is invoked. Identify emergency substitution rules that can be implemented to keep products on the shelf. Where possible, begin discussions with your vendors and wholesalers to obtain appropriate emergency commitments. Discuss backup strategies to meet product shortages.
- Implement a company-wide analysis of “essential” and “nonessential” job functions during a pandemic. Develop plans to appropriately shift resources. Consider cross-training and education that might be appropriate for your company.
- Develop emergency communications mechanisms that will be needed during a pandemic. This includes communications to associates and customers.
Change the rules
The CDC recommends that stores not require a doctor’s note for employees to stay home when they feel ill because they’re more likely to just show up for work, which could cause spread of the virus around the workplace.
It’s also important to make sure you have extra provisions in place to keep store surfaces clean. They recommend you don’t reuse sponges or mops when cleaning surfaces, and that you have to clean and sanitize surfaces far more often than usual. The Coronavirus can last up to five days on some surfaces, according to some reports.
The problem with the Coronavirus is it’s still unknown. It could have a very limited impact in the U.S., or it could get really bad. It could disappear with warmer weather, or not. But the more prepared CPG and retail companies are, the better shape they’ll be in once the worst of the virus has passed, and the better they’ll be able to serve their customers.
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