How 4 Retailers are Pivoting During COVID-19
The retail sector is in a state of flux with the pandemic causing changes in consumer habits at a faster pace than we have ever seen. It is also causing retailers to innovate like never before and accelerate the launch of key initiatives. Here are four initiatives that retailers have recently launched because the pandemic presented a unique set of opportunities they could not ignore.
1. Uber moves into grocery delivery
Uber is continuing its transition from a ride hailing company to more of a general delivery company with its recent launch of grocery delivery. This service allows customers to get on-demand delivery of grocery items within one to two hours. “Just as Amazon went from books to overall retail and opened up their marketplaces to third parties, we think we can really extend the definition of movement from moving you from point A to B, to moving . . . anything you want to have delivered to you” said Uber CEO Dara Khosrowshahi.
While the pandemic accelerated Uber’s transition to grocery delivery, prior to this year a number of small grocery stores and merchants had already established stores on Uber Eats so they could deliver groceries to their customers. On Uber’s first quarter 2020 earnings call in early May Uber reported that its grocery and convenience store delivery business was up 117%. “We’ve really doubled down on our Eats business, extending not just in food, but from food into adjacent categories like delivery, like grocery, and essentials,” said Khosrowshahi. “There we’re seeing a pretty extraordinary acceleration, which is good for the business, but it’s also a really important lifeline for the restaurants and other local stores in every city, that frankly our customers are interested in keeping alive in an unbelievably difficult situation [with] COVID.”
Uber will first launch its grocery delivery service in Toronto and Montreal as well as select cities in Brazil, Chile, Peru and Columbia. Some of the participating retailers in Canada include: Walmart, Metro, Rexall, Costco, Longos, Pet Valu and Well.ca. Uber is planning to launch grocery delivery in the United States later on this summer.
A key part of Uber’s value proposition is that it can deliver groceries on demand within a few hours. But Walmart is planning to offer unlimited same day grocery delivery and many people make a grocery list in advance, as they run out of products during the week, making an on-demand service less necessary.
Many consumers are also already using grocery delivery services directly from strong national retailers like Walmart and Loblaws and have grown to like these services during the pandemic. They will likely stick to these retailers making it harder for Uber to establish a foothold in this market. Uber’s service may be a better fit for consumers looking to support smaller local merchants. With Uber’s main ride hailing business down by 80% in April of this year and with Uber unable to turn a profit since the company was founded in 2009 the stakes are high to generate revenue and more importantly profits.
2. Walmart plans to offer a subscription service
Walmart is planning to launch a subscription service called Walmart+. The new service is $98 per year, $21 less than the cost of Amazon Prime which now boasts 150 million members. Some of the services subscribers can access include unlimited same day delivery of grocery and general merchandise items, at no additional cost. Members also receive discounts on gas, early access to deals on new products and reserved delivery slots. Subscribers will also be able to skip the checkout line in-store and instead can scan items and checkout using Walmart’s Scan and Go app.
More than half of Walmart’s highest spending shoppers also have an Amazon Prime membership. Walmart is worried that those customers may eventually buy more of their groceries from Amazon as Amazon expands its grocery delivery capabilities.
Walmart’s move to launch a delivery focused subscription service is not a surprise since Walmart has really upped its eCommerce game over the years as it battles with Amazon for a larger share of the customer’s wallet. Walmart’s eCommerce initiatives have included essentially “buying” eCommerce talent and leadership through its purchase of Jet.com, increasing the number of third party sellers on its website, as well as increasing the amount of grocery pick up locations, all activities which have bolstered the retailer’s online sales. Walmart now has the second largest eCommerce share in the United States behind Amazon. Don’t expect Walmart to back down from its fight with Amazon in eCommerce anytime soon.
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3. Pepsi launches direct to consumer websites
As the pandemic shifts more shopping online one CPG company that acted quickly is PepsiCo. It is the first major CPG company to launch its own direct to consumer websites as a result of the crisis. PepsiCo’s new direct to consumer websites which launched at the beginning of May are PantryShop.com and Snacks.com. They give consumers a way to easily buy their favourite snacks and pantry staples online. Speaking about the new initiative PepsiCo’s Senior Vice President and Head of eCommerce Gibu Thomas said: “in these uncertain times, as more and more consumers are using e-commerce channels to purchase food and beverage products, PantryShop.com and Snacks.com offer shoppers another alternative for easy and fast access to products they love.” "We very early in the crisis realized that consumers were going to need an alternate way to buy snacks, given that shopping habits are changing so quickly" said Frito Lay’s Chief Transformation Officer, Michael Lindsey.
PantryShop.com sells bundles of popular PepsiCo foods. One of the bundles offered is “Rise and Shine” and for $29.95 or $49.95 (family pack) customers get Aunt Jemima pancake mix, Tropicana juices, Quaker Chewy Granola Bars, Quaker Instant Oatmeal and other products to get your day started.
Snacks.com as the name gives away is all about your favourite snacks. Unlike PantryShop.com snacks can be purchased a la carte. From Cheetos to Doritos to Lays chips there is something for everyone.
PepsiCo recognizes that it still needs to focus on its traditional distribution channels as they represent the vast majority of sales but this presents the company with a new opportunity for sales as well as better customer data.
4. Harrods opens an outlet store
If there wasn’t a pandemic going on no one would believe it but 170-year-old storied department store Harrods opened its first outlet store earlier this month. Typically on any given day 80,000 people walk through Harrods but due to social distancing capacity is limited. “Our normal sale in the Knightsbridge store takes us four weeks to clear and that is with 80,000 people going through the store each day,” said Michael Ward, Harrod’s Managing Director. “We are currently limited to 4,500 at any one point in time. It was going to take us months [to clear inventory].” “I don’t think people understand how painful the last 90 days has been,” added Ward. “We are in a new norm and we have to adapt very quickly.”
The new outlet store is 80,000 sq. ft, spans two floors and will help Harrods to unload unsold inventory. It is located in a different area than the retailer’s flagship store, in a lower income area.