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Summary
- Supermarkets expect a surge in online deliveries as half a million people are likely to go into quarantine
- Tesco is going to waive basic delivery charge of £4.50 to tackle Amazon, a US technology firm which operates on a similar concept
- There was an almost 62 per cent jump in the amount of money spent online in the month of June as compared to February 2020
Supermarkets are yet again braced for a surge in online orders as a lot of holidaymakers returning from France are likely to go into self-isolation for a period of two weeks. The holidaymakers are supposed to self-quarantine after UK removed France from its travel corridor list due to spike in the number of coronavirus cases. France has always been a popular holiday destination for Britons. If people returning from abroad are found non-compliant, they could face a £1,000 fine.
Meanwhile, supermarkets are chalking out plans to increase their delivery slots in anticipation of a rise in online orders for essentials due to the new quarantine regime in place. According to some media reports, around half a million people were on holiday, travelling to countries like Spain and France. People returning from these countries would have to go into quarantine for a period of 14 days.
In these 14 days, people are not supposed to step out of their homes. Therefore, they would depend upon online marketplaces for the things they need during the quarantine period. In addition, there is a high probability that the coronavirus infection might spread. Supermarkets fear that they would be inundated with requests from online deliveries in the coming weeks and are ramping up their capacity in a bid to ensure people self-isolating can get access to things they need for their daily needs.
Also read: UK Retailers Scale Back Discounts in July As Demand Picks Up
Waitrose has reportedly doubled the number of weekly online delivery slots, out of which nearly 25 per cent would be reserved for elderly and vulnerable people as they are into high-risk category. Other supermarkets are expected to roll out similar strategies and are braced for a surge in orders as families go into quarantine.
UK’s leading retailer, Tesco Plc (LON: TSCO) would be waiving delivery and handling charges of £4.50 for its privileged customers, ‘Clubcard Plus customers’. This move made by the company could be seen as a fightback measure to tackle Amazon, a US technology firm which operates on a similar concept. The US tech company waives the delivery charges for its ‘Prime members’. According to market analyst Kantar, the online grocery market has grown from 7.4 per cent of total grocery sales in March (during lockdown) to 13 per cent now, while the lockdown has eased.
The general retailers can now build upon the experience that they have gathered during the peak of the coronavirus crisis to avoid the sort of chaos that was seen earlier. The sudden announcement induced a rush at the airports and ports as UK tourists who have already crossed the lines, flocking to return home before Saturday (deadline) to avoid quarantine rules.
How did supermarkets tackle the unprecedented surge of online orders in March?
Tesco Plc (LON:TSCO), the market leader in the UK’s supermarket industry, implemented rationing on essential items. The intention behind such a move by the company is to provide access to the essentials for everyone. The company has almost stocked out its self-branded tinned tomatoes and pasta. The company had imposed limits (maximum of 5) on items which have high demand. These items include bleach, anti-bacterial wipes, cleansing solutions, water, medicines, tinned food items and other foods with long shelf life. These limits are implemented on both online and offline business models.
Retail Discounter, Aldi, was among the first in the supermarket industry to put a cap (no more than four) on groceries when anyone visited the store. The online supermarket, Ocado Group Plc (LON: OCDO) introduced virtual queues on online orders for existing customers due to high demand. The company imposed a limit on toilet paper rolls. Ocado Group Plc is the United Kingdom based consumer services company that is engaged in the business of online groceries retailing. WM Morrison Supermarkets Plc (LON:MRW) will be recruiting 2,500 extra pickers and drivers to increase the number of delivery slots. J Sainsbury Plc (LON:SBRY) has imposed new shopping rules for the elderly, who will be given priority access to the essentials in the first hour of business operations of the stores.
Share price return since lockdown till 14 August 2020 (Source: London Stock Exchange)
While other sectors continue to bleed, some of the general retailers managed to deliver triple-digit returns amid the coronavirus crisis.
Also read: UK retailers to come together to provide for the nation during the Coronavirus pandemic
As per the data from the Office for National Statistics (ONS), the volume of retail sales increased by 13.9 per cent in June 2020 when compared with May 2020. However, In the three months to June, the volume of sales decreased by 9.5 per cent when compared with the previous quarter.
As the lockdown was eased, the proportion of online spending reduced to 31.8 per cent in June when compared with the record 33.3 per cent reported in the previous month, but was much higher than 20.0 per cent reported in February, a month ahead of the imposition of the lockdown.
In a most striking revelation, ONS stated that Non-store retailing surged to a new high level in June 2020, with continued growth during the pandemic and when compared with the month of February 2020, there was an increase of 53.6 per cent in volume sales.
Though, department stores witnessed the smallest decline with the biggest increase in online sales. Overall store sales fell by 28.3 per cent, at the same time online sales increased by 111.3 per cent. ONS data also revealed that average weekly spending for online retailing in June increased significantly as compared to the month of February. There was an almost 62 per cent jump in the amount of money spent online in the month of June as compared to February 2020.
The CPI Index (Consumer Price Inflation) was up in June as pricing of clothing and accessories went higher. Given the prevalent conditions in the economy, charging higher prices from consumers could push the inflation further up much earlier than anticipated. Thus, competitive pricing would attract more customers. Industry experts believe that online Food & Drug retailers are likely to record strong growth in the near term. Consumers would think twice before visiting stores amid safety concerns with reference to the novel coronavirus. As fears of catching Covid-19 still exists, the conventional retailers ramp up operations to serve millions of shoppers.
