Finance Consumer ‘Big retail winners’: Supermarkets benefit from coronavirus online shopping boom

‘Big retail winners’: Supermarkets benefit from coronavirus online shopping boom

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The coronavirus pandemic has led to a financial windfall for supermarkets in Australia and around the world, resulting in an unprecedented rise in demand for online shopping that experts say will remain permanent.

Supermarkets have hired thousands of staff to fulfill online orders and meet in-store demand, with one of the world’s biggest supermarket chains this week announcing it would reward thousands of temporary workers with permanent jobs after the virus lockdown led to “exceptional growth” in online orders.

British supermarket chain Tesco revealed that it would create 16,000 permanent new roles, including staff to pick shelves for customer orders and delivery drivers.

The pandemic has been a windfall for supermarkets across the world.

Online customer numbers had more than doubled since the start of the pandemic, Tesco said.

Tesco’s online sales now account for 16 per cent of all sales, up from 9 per cent pre-pandemic, and the firm expects the trend to continue.

Australia’s major supermarkets have also been on hiring blitzes in recent months in response to demand.

In March, Woolworths announced that it would create 20,000 new jobs to meet the surge in demand, while Coles announced it would hire 5000 casual workers.

Coles later revealed it had received a staggering 36,000 applications for the casual roles.

The union representing retail workers said Australia’s supermarkets should be hiring to meet sustained online shopping demand.

“Online sales across the retail sector have increased significantly during the COVID-19 Pandemic and much of this change in shopping habits will continue after the crisis has passed,” SDA national secretary Gerard Dwyer said.

“All retailers should be planning for a workforce designed to manage increased online shopping into the future.”

Mr Dwyer also pointed to the role of insecure work in the spread of COVID-19.

Insecure work has neither increased employment or productivity in recent years and has been one of the reasons for the unnecessary spread of COVID-19 into the community,” he said.

“It is also one of the reasons Australia was not sufficiently prepared for the demands a pandemic would place on authorities to cope with COVID-19.”

A recent survey commissioned by the ACTU found that more than 50 percent of workers without access to paid sick leave would turn up for work with even mild COVID-19 symptoms because they needed the money or feared they would lose work.

“It is crystal clear that all Australian workers deserve access to sick, annual and long service leave as well as superannuation,” Mr Dwyer said.

“Only permanent work can ensure that.”

Pandemic’s ‘big retail winners’

Australia’s supermarkets have been among the handful of businesses whose fortunes have soared during the pandemic, said retail expert Louise Grimmer, a senior lecturer in marketing at the Tasmanian School of Business and Economics.

“Australian supermarkets, particularly Woolworths and Coles, have been the big retail winners out of the pandemic (along with hardware, office supplies and pharmacies) and we’ve seen huge growth in online demand for supermarket shopping driven primarily during the first lockdown and now again in Melbourne,” Dr Grimmer explained.

“There are still many consumers though who prefer to shop in physical supermarkets, but there is no doubt that the COVID-19 pandemic has supercharged the shift to online shopping and we’ve seen acceleration in this area in that changes that we previously thought would take five to 10 years actually happened in the space of four or five months.”

Dr Grimmer said the pandemic had highlighted “the importance of retailing for the community and the role that supermarkets played in allowing consumers to access vital food and essential household items should not be underestimated”.

“On the whole Australian supermarkets have delivered a key service for consumers, and this includes the smaller, local grocery stores as well,” she said.

The big two supermarkets “clearly performed well” during the early phase of the pandemic, but demand may taper off as “panic-buying and stocking up subside and at the same time the easing of restrictions in many areas means more people can eat out again”, Dr Grimmer said.

The shift to online shopping

Australia has “traditionally lagged behind other countries with regard to investing in digital capability”, but the pandemic has forced retailers to fast-track their online offerings, Dr Grimmer explained.

“In general Australian retail has lagged behind internationally with regard to investments in digital technology and pre-COVID-19 the rate of online shopping was quite modest at about 7 per cent to 8 per cent of total spend,” she said.

“However, the pandemic has sped things along and we are now seeing greater investment, particularly from the big two supermarkets in the digital space.”

Although delivery was “certainly an issue in the early days of the pandemic as retailers were scrambling to adapt to the online environment”, many of the early issues with online shopping have now been solved, Dr Grimmer said.

Now, Coles and Woolworths are “investing heavily in distribution and logistics to aid their online shopping offering”, Dr Grimmer said, pointing to the launch of Coles’ online catalogue.

“Up until the pandemic, a zero sum game has been played by many retailers and consumers pitting physical retailing against online,” Dr Grimmer said.

“But it’s now evident that the two can co-exist very well and that many consumers now expect retailers to offer both an in-store experience as well as an online store.”