The spread of the coronavirus across the UK has generated panic buying, encouraging many consumers to stockpile basic items at an alarming rate. Supermarkets have had to face extraordinary demand causing empty shelves and supply disruptions throughout the country. In this article, we explore the impact of the coronavirus on consumer behaviours and consequences for retailers and major brands.

Consumers started stockpiling early March

 

The UK market showed early signs of stockpiling, well before the country moved to stage 2 and took stricter measures to contain the spread. According to a survey conducted by HIM & MCA Insight, at the beginning of March:

  • More than 2 out of 3 UK consumers (67%) were concerned in some way about shops running out of groceries in case of a major coronavirus outbreak
  • 1 in 3 UK consumers (34%) had already started stockpiling
  • 30% of buyers stockpiling said they planned on spending over £100 while 5% claimed they would spend over £500

Consumers have been purchasing large quantities of both food and non-food items, including pasta, rice, water, milk, canned foods, pet food, disinfectant, wipes and toilet paper. These behaviours have escalated as the virus has expanded across Europe, with large queues forming outside of supermarkets.

Blonnie Walsh, Head of Insight at HIM & MCA Insight told Food Navigator: “The perceived growing threat of coronavirus is becoming more of a concern for UK grocery shoppers and that is being reflected in their beliefs and actions.”

The government has been trying to reassure citizens and contain panic buying. Culture Secretary Oliver Dowden told the BBC: “There is absolutely no need for anybody to stockpile or anything like that.” He added: “I understand people’s concerns if they go to the supermarket and see that… products are not there. There really is no need to buy things in volume.”

The British Retail Consortium also issued a statement on March 15th in which it urges consumers to be reasonable. It pleaded: “We would ask everyone to be considerate in the way they shop. We understand your concerns, but buying more than is needed can sometimes mean that others will be left without.”

Major supermarkets are restricting purchases of basic items

 

To avoid supply disruptions, several supermarket chains have introduced restrictions such as:

  • Aldi, which has restricted all items in-store to four units maximum per customer (the most drastic measure to date)
  • Asda, which has implemented a two-item limit on hand sanitizer and cleaning products
  • Morrisons, which has introduced a maximum order number on selected products
  • Ocado, which has limited toilet roll purchase to two 12-packs per customer
  • Tesco, which has announced that consumers can no longer buy more than five of certain goods including antibacterial gels, wipes and sprays, dry pasta, UHT milk and some tinned vegetables
  • Waitrose, which is restricting online sales of soaps and wipes

In addition, to help meet demand and replenish shelves, the government has temporarily extended authorised delivery hours. Environment Secretary George Eustice explained: “By allowing night-time deliveries to our supermarkets and food retailers, we can free them up to move their stocks more quickly from their warehouses to the shelves”.

coronavirus 2

Online grocery shopping has become more popular

 

To avoid contacts, many consumers have also turned to online grocery shopping. However, retailers have a limited number of vans and are not equipped to absorb the exceptional demand. As a result, there is now a long wait for a delivery slot.

Ocado, which exclusively operates online, has been struggling to satisfy orders. It announced on March 13th that is was no longer accepting new customers. It indicated on its Facebook page: “In this time of unusual demand, we have made the call to temporarily prioritise deliveries for you, our existing customers. This means, after today we will not be processing new customer bookings for the time being.” The retailer has also had to make changes to its app and website to avoid them crashing due to the high number of visitors.

Online grocery shopping currently accounts for around 7% of the grocery market in the UK. The question is whether the surge will last beyond the coronavirus crisis and consumers will truly change their shopping behaviours. Some experts have pointed out that it cannot be a lasting solution.

Bruno Monteyne for example, European Food Retail Senior Analyst at Bernstein, told the BBC’s Today show as reported by The Daily Express: “Online grocery shopping will not survive, that’s a pipedream. It’s the most inefficient way of getting food to your house, you get someone else to pick and deliver it for you. If we’re going to have five to 10 percent labour shortages, it’s much more important that a person fills the shelf than he sits there driving a truck.”

FMCG brands are working hard to satisfy demand

 

In this context, some FMCG brands have increased their production to meet the demand such as PZ Cussons. A company spokesperson told The Daily Mail: “We have significantly increased the production of Carex hand gel and hand wash products, with our manufacturing facilities working at full capacity in response to the exceptional demand being experienced”.

However, many FMCG brands could soon face supply disruptions. According to a survey conducted by the Institute for Supply Management, 75% of companies are seeing capacity disruptions in their supply chains as a result of coronavirus-related transportation restrictions. This includes Coca-Cola, which has indicated that it could face difficulties in supply of artificial sweeteners coming from China used in its Diet Coke range.

But the UK is in a very unique situation. There is a high amount of stock in the country due to the reserves set up last year in preparation for a potential no-deal Brexit scenario. Tom Enright, Research Vice President of Global Retail Supply Chain at Gartner, told WIRED that many companies “have had unusual levels of inventory already. How long they will last depends on how big they were in the first place. Most of them will have a few weeks of inventory. The bigger challenge now is whether the stock is in the right place.”

Other European countries face similar situations

 

Panic buying hasn’t only happened in the UK. With the coronavirus spreading across Europe, many countries have been facing similar situations including France, Germany, Italy, Luxembourg, the Netherlands and Spain.

According to Nielsen, Italian consumers quickly made precautionary purchases in response to the acceleration of the pandemic in their country. Between February 17th and 23rd, sales of FMCG products rose by 8.3%, with an 11.2% increase in the Lombardy-Venezia-Liguria region. In Lombardy alone, on Sunday February 23rd, purchases increased by 87%.

In addition, Italian households also turned to online shopping. Nielsen notes that the increase in online purchases of FMCG products reached 57%, well above the trend for all channels (+8.3%).

In France, consumers rushed to supermarkets on February 29th, right after the country moved to the stage 2 of the epidemic, with sales up by more than 20% across a representative set of FMCG categories. The categories that experienced the strongest growth were pasta and canned fish (+100%), cereals (+ 70%), rice and mashed potatoes (+ 50%) as well as canned vegetables, oils and bottled water (+ 40% to + 50%).

The coronavirus spread has thus caused massive panic buying in the UK and across Europe. Fearing confinement, households have been stockpiling basic items. These purchases have benefited major FMCG brands, which have experienced record sales in recent weeks. The coronavirus outbreak has also boosted online grocery shopping, with a dramatic increase in the number of orders. As the epidemic settles in Europe, this phenomenon is likely to persist. Many FMCG brands are working on strategies to meet demand and avoid supply shortages. It remains to be seen whether this unprecedented situation will have a lasting impact on consumer behaviours.