Australian consumers are actively stockpiling grocery and medical items as concerns grow around the Novel Coronavirus (COVID-19) becoming a worldwide pandemic. Stocks of hand sanitizers, medical face masks and toilet paper have already dried up in some stores, with no clear indication of when supplies will be replenished. Nielsen Homescan research reveals that online grocery sales increased significantly (+45%) over the past few weeks as many consumers look to limit their exposure to large crowds in-store. For retailers, online stockpiling is putting logistical pressure on home delivery networks, while a number of brands are grappling to keep up with demand.

Australia is following in the footsteps of countries including China, the U.S. and Italy, where Nielsen research found significant spikes in the hoarding of emergency and essential supplies as consumers rush to build “pandemic pantries.”

Rising consumer concern is having a ripple effect on the sale of online grocery products outside of hand sanitizer and toilet paper, with basic foodstuffs including pasta (+76%), eggs (+72%), canned meals (+71%), tea (+62%), rice (+58%), flour (+55%) and shelf-stable milk (+50%) all recording significant jumps in dollar sales during the 4 weeks ending 22/02/2020 compared to the same period last year.

Bernie Hughes, Managing Director, Nielsen Connect – Pacific, said: “The rush to stock up on these goods will have an almost immediate impact on supply chains for manufacturers of the most sought-after goods. And while we expect that replenishment will eventually catch up in most categories – especially where production is local; there are some instances where shortages could hang around – particularly for products manufactured in, or where packaging is sourced, from China. Products that come off factory lines or go through distribution systems in virus-impacted countries could also face logistical issues.”

“It’s a fluid time, and retailers are balancing between keeping enough of the most sought-after supplies on their shelves while making contingency plans for longer-term gaps in their product portfolios. We are already seeing instances where retailers are rationing certain products to limit the amount of stockpiling per shopper,” said Hughes.

“Managing stock levels will be critical as continuous out-of-stocks will result in shoppers store switching to get the products they need; while brand loyalty could be affected as shoppers are forced to select items outside of their usual repertoire or manage their household budget to sacrifice impulse spending and non-essential items.”

THINKING BEYOND THE BUG
In many instances, pantry stockpiling will simply bring forward future purchases (e.g. toilet paper, medical supplies) and there will be a mid-term sales trough as these products are gradually consumed. Other categories, particularly shelf-stable food products, will experience expansion as households potentially consume more in-home than they usually would.

Online pantry stocking driven by fear of a medical pandemic has spurred a new wave of growth for online grocery. Consumers are turning to e-commerce in turbulent times and are more open to exploring alternate retailing options if stock is available, the shopping experience is easy, prices are competitive and there are convenient delivery and/or pickup options.

“Having an effective online strategy in place is becoming increasingly critical for retailers and brands; and measuring the continued growth of this channel is key to understanding how it fits in within shoppers’ buying patterns and overall spending repertoire,” concluded Hughes.

Share