Pivoting is one thing, profiting is something else entirely...

Throughout the pandemic and lockdowns much attention has been given to the success of the grocery industry in ramping up their online delivery offerings. At face value it seemed these businesses, with their well-established fulfilment processes, installed customer-base and ordering mechanisms, would pivot seamlessly to embrace the rapidly growing online market.

But, it’s not that simple. Newer market entrants, designed specifically to service online customers, have been able to develop their proposition accordingly. Starting something is often far easier than changing something well established. And, many would observe, businesses such as Ocado, which has posted 40.4% year-on-year growth in the second quarter of 2020, are not really grocers at all. Instead they are technology businesses built to serve the needs of grocery consumers.

With consumer priorities likely to be driven by a focus on health, home, habit and hygiene, businesses will need to embrace the rapid transformation over the last few months and quickly find a way to replace the already small margins associated with in-store grocery shopping. For the countries largest retailers this is no small undertaking. While the proximity of their stores offers some advantages, this pivot puts the onus on businesses to assess how to capitalise on this newfound online proximity, the insights this provides from the front end to back end to inform product assortment, selection, pricing all the way back through to sourcing, and finding efficiencies in ‘picking’ and investing in the technology, transportation and staff to make it happen. These questions suggest costs but also opportunities will rise in the near term. This presents something of a dilemma to the established grocers: how much should they gamble on online shopping exceeding in-store and can they afford to wait and find out?