Many brick-and-mortar businesses were left reeling in China after strict measures to contain the spread of COVID-19 made regular trips to the neighborhood grocer all but impossible.
In a survey of key retail companies and over 10,000 traditional grocery stores by Nielsen, 67% of retailers said they would put significant effort into expanding online channels and accelerating the development of home delivery capabilities in the upcoming year.
The swift adoption of measures to restrict the flow of people and goods resulted in major supply chain disruptions for China’s grocery industry. Caught unprepared, 60% of the stores faced shortages as demand soared, but only 1.1% were able to purchase from dealers or other channels, and only 0.6% turned to e-commerce, according to the Nielsen report.
The biggest challenges faced by retailers as people scrambled to stockpile were insufficient inventory of groceries, difficulty in logistics and an insufficient delivery force, the report showed.
These challenges are being faced by retailers worldwide as the coronavirus spreads. The impact of these disruptions may be more intensely felt in major economies where online grocery retail penetration is relatively low.
China’s online grocery sales are expected to grow at a 31% CAGR to reach close to $200 billion, according to research by IGD in 2018. This is likely to accelerate in the wake of the COVID-19 outbreak.