How the food service and food retail industries have responded to Covid-19
How the food service and food retail industries have responded to Covid-195 minutes
As we enter 2021, many sectors of industry around the globe continue to face varying degrees of uncertainty as a result of the novel coronavirus. It’s been almost a year since business as we knew it came to a sudden halt as Covid-19 cases first began to spike.
Food retailers such as grocery and convenience stores had to adjust almost instantaneously to a new way of doing business with a sudden, monumental increase in demand for delivery. By the early months of summer, businesses in food service had also shifted to address new customer expectations and government regulations.
It was a tumultuous year for an industry that, until then, had been slow to adopt technological solutions. But just how profoundly were businesses in this sector impacted? To find out, we surveyed 150 decision makers involved in grocery store, convenience store, restaurant or food service operations across the US and Canada – and the results were illuminating.
Hindsight is 20/20
Given the hindsight provided by the realities of 2020, many industry leaders indicated that they wish they’d been more innovative. One respondent said, “one change that would have made all the difference is advanced technology. Because of the pandemic, most of our consumers prefer contactless payment and home delivery.”
Having gained this knowledge in hindsight, respondents indicated an increased appreciation for agility in the face of business challenges. “Businesses now need to be ready, like never before, for any kind of change, and that’s possible only with a proper degree of agility embedded in the organizational culture,” said one VP of Marketing for a convenience store company.
Leveraging tech to turn on a dime - when needed
According to our study, 71 percent of respondents saw digital transformation as the leading driver for business agility. While the industry saw the adoption of many new technologies in response to Covid-19, in many cases the pandemic merely accelerated changes that were already underway, such as a move to mobile payments and self-checkout.
As a result, companies don’t need to wait for new technologies to arrive to adapt to the new normal. They can instead address consumer demand by investing in technologies that already exist and can provide increased agility.
Electronic Shelf Labels (ESLs) are just one example of an existing technology that can address challenges introduced by Covid-19 and provide the desired agility of digitalization. According to Kroger, the United States’ largest supermarket chain by revenue, a typical store can take up to “two weeks to be completely repriced by hand” using paper shelf labels. Alternatively, ESL devices can be updated immediately using cloud-based software from anywhere on any device.
Aside from reducing labor costs, the ability to reallocate those hours to more pressing tasks is invaluable, especially as retailers operate with minimal staff to address pandemic-related health concerns.
Food lockers and contactless tech
Contactless technologies have been another way in which companies have addressed safety concerns for both customers and workers. According to our survey, many respondents indicated this space is where they’ve been most innovative in response to the pandemic. While solutions such as facial recognition for kiosks and POS are still largely in the pilot phase, food lockers and vehicle/license plate recognition for pick-up have seen limited adoption.
Food lockers are another trend that had seen adoption prior to Covid-19 but has received increased interest this year. With this solution, customers order their groceries online and pick-up their goods after they’ve been gathered and placed in an assigned locker. To even further address health concerns, these lockers can be placed outside to limit traffic inside markets.
Doing more digitally
With concerns about physical safety coming to the forefront, customers began shopping for groceries and ordering from restaurants online. This shift was quick and drastic. As we noted previously, online grocery orders were up 150 percent between March 12 and March 15, according to data from Rakuten Intelligence. Another source, PYMNTS.com, noted online orders jumped from 3.9 percent of retail business at the beginning of March to 9.1 by the month's end.
According to our new research, these trends have continued in both the food retail and food service industries. Across both industries, our respondents indicated increased customer interest in mobile ordering, drive-thru, curb-side pickup, home delivery and contactless payments. This coincided with a decline in interest for in-store shopping or dining.
Connecting the dots
These trends have created a challenge for food retailers, who have needed to digitize large inventories and refine or develop online shopping portals. Quick-service restaurants (QSRs), on the other hand, have limited menus with smaller inventory. They also have more time and experience leveraging technologies such as mobile apps for online ordering. Taco Bell, for instance, launched its own app in 2014.
There are technologies and solutions that were emerging trends prior to the disruptions caused by the novel coronavirus that can be utilized to address changing customer expectations. The concept of the connected restaurant emerged roughly five years ago, but its possibilities are yet to be fully realized. As connectivity between devices, vehicles and the networks operating these connected restaurants becomes increasingly standardized, there is a greater potential to create a safe, seamless customer experience.
Where are we now?
Though this notion of a connected restaurant may sound like science fiction, companies were leveraging these solutions to cut food and labor costs while improving the customer experience prior to March 2020. Currently, back office technology can provide a highly flexible and scalable web-based solution with the ability to compile data across an entire network of restaurants and present that information in a single location.
Our research indicates that a majority of restaurants are collecting more customer data than they were a year ago as transactions move primarily to the online space. Nearly half of respondents in the restaurant and dining space also indicated their customers appear more willing to opt in to personally identifiable technologies, such as facial or vehicle recognition, for the sake of convenience and personal safety.
Considering more than two-thirds of our respondents in this space expect to implement technology to collect more customer data over the next year, it becomes easier to imagine a connected restaurant solution where a customer’s preferences, order and payment information are identified by vehicle as they enter the drive-thru for a safe, seamless and efficient experience.
Read our full study for more information on how companies in the food retail and food service industry are adapting to the changes presented by Covid-19.