Imperfect Foods' business is booming during the pandemic
New York (CNN Business)In the early stages of the coronavirus pandemic in the United States, finding an open slot for grocery delivery was like winning the lottery. Even when shoppers were lucky enough to lock one in, food and cleaning supplies were often out of stock and there were delivery delays ranging from hours to days.
It has gotten easier since then.
Companies that have online grocery businesses — those that offer curbside pickup, at-home delivery or both — hired more employees to deal with the higher demand they saw and have since kept those workers around. They have also expanded their shipping capacity. And though demand for grocery delivery is still elevated compared to pre-Covid times it has cooled since the pandemic first hit.
But with winter coming, and cases rising in a majority of states, you may be wondering whether — should you be again restricted from going out, or if case levels have risen to the point in your community that you feel uncomfortable going into a store —you’ll have better luck getting groceries delivered, on time and with all the items you wanted, than you did in the spring. The answer, due to that work the companies have done: Probably. But no guarantees.
Companies ranging from regional chain Hy-Vee to Boxed, a site that sells bulk orders directly to consumers, are staffing up in stores and warehouses to handle delivery and curbside pickup orders; stockpiling extra inventory like cleaning supplies, holiday foods and canned goods; adding new delivery carriers to avoid shipping delays; and making changes to their websites to try to give shoppers more windows to order.
That doesn’t necessarily mean everything will go smoothly for consumers.
Analysts caution that an outbreak of coronavirus cases this winter may once again strain supply of high-demand items like toilet paper and paper towels in harder-hit regions of the country.
“It’s not going to be perfect, but it’s going to be better than it was in late March and early April when no one was prepared,” said David Bishop, an analyst at consulting firm Brick Meets Click.
Whether or not you get the groceries you need doesn’t just depend on retailers but their suppliers as well, he said.
“We’re going to continue to face shortages of paper goods,” he said. “Retailers will only be able to get what suppliers produce. The pain point is the supply.”
Electric carts and more freezers
Still, grocers are taking steps now to try to control the things they can.
Amazon (AMZN), which also owns Whole Foods, is adding a new website tool that allows customers to sign up to be notified when a delivery spot online becomes available so they don’t have to keep refreshing the website.
The company isn’t currently using the feature “because demand has stabilized,” according to a spokesperson, but “it will be available to us should we see sharp spikes” in the coming months.
And Shipt, a delivery service owned by Target (TGT), is hiring 100,000 workers ahead of the winter.
Although online grocery sales growth has slowed down since the spring peak, analysts predict the potential combination of new coronavirus cases, a busy holiday stretch, flu season, and restaurants closing in the colder months due to indoor dining restrictions will push more shoppers to buy online again.
Nearly 60% of shoppers say they plan to stock up again as winter approaches, according to a survey of 1,000 shoppers by market research firm Inmar Intelligence conducted the week of October 14.
FreshDirect, an online grocer based in New York, is adding 1,000 workers, including truck drivers to transport groceries from warehouses, as well as butchers and fishmongers to prepare food.
The company was not staffed to handle the flood of orders from existing customers and shoppers when the pandemic first hit, said CEO David McInerney.
“The barriers to online grocery got absolutely obliterated” in March, he said. “We couldn’t take” the surge in demand. The company’s systems were overwhelmed because people were buying two and three times as much per order as they typically did, buying for a longer period of time than usual and ordering for friends and relatives.
This time around, it’s better prepared. It secured holiday items, such as canned pumpkin, baking supplies, and spices earlier than usual this year and is storing greater quantities of them in warehouses.
“We’re expecting a really, really busy winter, and it’s going to be filled with a lot of first time customers getting acclimated to online food buying,” McInerney said. “The colder weather is just going to push that along.”
Still, some retailers say there’s little they can do to avoid what might be inevitable.
“It doesn’t take another crazy spike like March to really begin to stress the system,” said Chieh Huang, CEO of Boxed. “It wouldn’t shock me if at some point in time during this winter we did see difficulty or lateness in getting orders and deliveries out the door.”
However, the company is trying to make sure people get their orders on time. In addition to building up what Huang called a “backlog of inventory” with suppliers in categories such as paper towels and disinfectant wipes, Boxed is working for the first time with smaller delivery carriers such as Star Overnight and OnTrac.
“We’ve been trying to onboard a variety of carriers so that we can be able to send out packages not just with major carriers” like UPS (UPS) and FedEx (FDX), he said.
Others are coming up with their own creative solutions. In addition to hiring 2,500 more employees, Hy-Vee, a grocery chain in the Midwest, plans to use new temperature-controlled carts to keep fruits and vegetables fresh as employees shop around their stores fulfilling customers’ orders. It will also use electric carts to ferry bags of orders from inside stores to parking lots where customers are picking up orders. Hy-Vee hopes this will reduce wait times for those customers.
Meanwhile, West Coast chain Raley’s Supermarkets is installing more coolers and freezers to some stores’ backrooms to keep shoppers’ perishable orders fresh for when they drive to pick up orders.
“We are definitely anticipating that there is going to be a resurgence” of orders from November through March, said Paul Gianetto, senior vice president of sales and merchandising at Raley’s. “We’re a lot smarter than we were.”
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