Published May 28, 2020
I am not sure when I heard about the impact of crisis, but I did not really get it until now. What I had heard came from two different directions. On the one hand, I had heard that “crisis does not alter history, it just accelerates it.” On the other hand, I had heard that “crisis never reverts to normal, but rather begets the next normal.” The current pandemic has taken me to a whole new place on these two impacts of crisis. I refer to the “crisis does not alter history, it just accelerates it” view as the historical view and the “crisis never reverts to normal, but rather begets the next normal” view as the normal view.
The historical view is very easy to see today. Before COVID-19, online grocery only accounted for 2-3% of total grocery sales-approximately 10% of that of other product categories, which average around 20-30% online sales. This phenomenon is hard to explain as grocery shopping is certainly not fun or experiential. In fact, grocery shopping to most is viewed as a chore. The facts are mind blowing. In April 2020, online grocery in the U.S. saw a 110% boost in daily online sales. It is clear to me that in five years we would have seen online grocery stabilizing at 15-20% of all grocery sales. But as a result of the coronavirus pandemic, we have seen online grocery sales jump from 2-3% to 20-30% in less than 50 days. This beyond belief surge of online grocery was unexpected, unpredictable and amazing. Not because online grocery grew, but because it grew in 50 days to what we expected it would have in five years. This is unbelievable!
The normal view is not as easy to predict. One thing, however, is clear. After the pandemic subsides and the stay-at-home orders are lifted, online grocery will not fall back to its pre-pandemic levels of 2-3%. At the same time, the 20-30% online grocery sales experienced during the pandemic will not become the next normal. I believe after COVID-19 is behind us, the percentage of online grocery sales will fall back from its pandemic level to around 15%. Many people have discovered that buy online pick up in store (BOPIS) or buy online deliver to home are great services and therefore this percentage will continue to rise over time. This is what is meant by the next normal-it will not be a steady number but a growing number. So, we will continue to move from the next normal to the next and so on.
An interesting reality that is evolving from the historical and normal views of crisis is that with grocery there is a line in the sand somewhere around 9%, which is the percent of online orders a single store can comfortably support through manual picking processes. For sure it is 8% or maybe 10%, depending on the number of items sold in the store (smaller number of items is 10%; larger number of items is 8%). But that does not matter as we are traveling from the left side of the line at 2-3% of online sales to a next normal of about 15%. We clearly have crossed the line. Crossing this line proves that picking online shoppers’ orders off store shelves went from a good solution to a terrible solution in the last 50 days. So, hang onto your hats, grocery chains. The game is really going to get interesting. The historical view has taken us to a normal view that is a game changer.
