Expert: Contagion to continue to roil food supply chains, shopping behavior

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The Covid-19 pandemic will continue to disrupt the food supply chain and sway shoppers’ spending behavior, so enterprises should be prepared to face emerging challenges and seize new opportunities, according to an industry expert.

JJ Moreno, chief strategy officer of Metro Retail Stores Group Inc., in a webinar, said the Covid-19 outbreak has given rise to a number of challenges and new trends in the retail sector.

These challenges include changing customer behavior and preferences, labor issues (shortage, work arrangement, occupation safety and health), transport restrictions and quarantine measures, cash/liquidity concerns, regulatory changes/interventions, higher cost of doing business, inadequate infrastructure, reduced production and sourcing issues, inventory issues (shortage and excess), and economic slowdown.

Moreno also shared his observations on supply chain and retail trends, foremost of which is a growing emphasis on food security and public health in the years to come.

There is also a rise in consumer demand for essentials, particularly in the areas of food, health and hygiene. Other trends show the growth of e-commerce and “less contact” and “contactless” transactions. Increase in home-based activities (work, dine, study and entertain at home) has also been observed, said Moreno.

In addition, there will be fewer trips to the stores, bigger basket sizes due to less frequent visits, and demand for safety and hygiene measures in stores. And because of the lockdowns, proximity and accessibility are key.

“We see also that there is lesser brand loyalty. People are going to look into value for money. They are going to look for what is available, mainly because they have few trips to the stores…and they will go for those that have longer shelf life because they are packing their pantries,” Moreno further said. He added that they also anticipate continued supply chain disruptions, something businesses must strive to prepare for. But there are also opportunities brought about by the pandemic. Moreno urged retailers and businesses to take the opportunity to “build an ecosystem of partnerships” with partners, suppliers and others as they will be better off with a “more engaged partnership” as compared to a “transactional partnership.”

The rise of home brands also presents another opportunity, he said. As brand loyalty lessens, “quality home brands will now come to fore,” giving enterprises the chance to attract and retain more customers. Other opportunities for enterprises center on digitalization, not only for customer relationship but also for planning and program execution.

Government social amelioration programs can also be complemented as they can lead to increased sales, said Moreno. This is also the time to consider updating processes, store layouts, and business models, he added. To overcome Covid-19-driven challenges, Moreno urged businesses to address not just external issues such as supply chain disruptions but also internal ones like “organizational inertia,” and to work on reshaping their business models to effectively adapt to the demands of a new normal.

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