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The updated view from customer 238,319 in the virtual queue - how omni-channel retail is coping with Coronavirus

Stuart Lauchlan Profile picture for user slauchlan March 27, 2020
Summary:
Updating developments in the retail sector's efforts to maintain working supply chain management during the Coronavirus crisis.

retailers
(Various )

When I last took a look at the state of the retail supply chain, I found myself as number  6023 in the virtual queue at online grocery firm Ocado. Flash forward just over a week…and I”m now number 238,319 in line - and I’m only allowed to join that waiting list because I’m an existing customer.

(Then again, even if I did sit and wait to get to the front and actually be able to place an order, the chances of there being a delivery slot anytime soon is negligible.)

So, it’s all going well, yes? Well, no, clearly not, although the situation across the omni-channel retail sector has evolved rapidly over the past week or so. All around the world, offline stores have been shuttered temporarily until the Coronavirus crisis is under some form of manageable control. (Or Easter Sunday, if you’re up for re-election as the President of the United States.)

The shift towards doing more online is therefore inevitable and in fact in some countries, such as the UK, forms part of official Government medical advice. But it’s all very well for, for example, British Prime Minister Boris Johnson to urge people to use delivery services where possible when that window of possibility is pretty firmly closed to a lot of people.

The pressure on the supply chain and the increasing difficulties in meeting fulfilment demand on online orders has led to some changes in policy from the leading grocery chains. At Ocado, the company stopped signing up new customers a few weeks back and is now focusing both on existing account holders, but also particular groups among that demographic. In an email to customers, Melanie Smith, CEO, Ocado Retail, this week noted:

We currently have around 10 times more demand for our services now than we did before the outbreak began, and with every announcement, we see a further extraordinary surge of customers to ocado.com. No matter how hard we work, we will not have enough capacity to serve the unprecedented levels of demand.

The firm took a decision not to accept any new orders for a two day period last week ,which allowed it to make some behind-the-scenes changes to the website, as well to clear the backlog and deliver to around 80.000 customers who had managed to place an order. The site is now back up and running, with the virtual queuing system noted above still in place. Some other changes have been made, including restricting customers to placing one order every seven days, so as to try to free up delivery slots. There have also been inventory amendments, Smith explained:

We’re making sure there’s enough for everyone by working closely with suppliers to constantly restock, so all customers get what they’ve ordered each time they shop. To help with fair distribution, some products are limited to one or two per order.  We’ve reviewed our range to make sure we have everything you need, but have decided to take out a small number of bulky items which reduce the number of orders we can carry in our vans.

The company is also attempting to segment its customer base to service those most in need, putting to the test the 'Holy Grail' of retail of being able to slice-and-dice your customer database for specific targeted actions. Smith said:

We are already delivering groceries to many elderly and vulnerable individuals, who have long formed a substantial proportion of our customer base. Our support teams and drivers are working tirelessly to identify and support our most vulnerable customers and to make changes to our service so that we can prioritise their immediate needs.

Needy

It’s the same story at Sainsbury’s where the firm announced via social media:

We are prioritising elderly and vulnerable customers for online delivery slots. If you consider yourself to be vulnerable and do not receive an email from us today, please visit our Groceries Online website tomorrow (Monday) for information on how to contact us.

This mirrors the decision offline to allocate dedicated time in stores to key workers and the elderly or vulnerable. In an email, Mike Coupe, Sainsbury’s CEO, said:

If you or an elderly family member, friend or neighbour would like to shop during this hour, please check online for your local supermarket opening hours….We will also help elderly and vulnerable customers access food online. From Monday, 23rd March, our online customers who are over 70 years of age or have a disability will have priority access to online delivery slots. We will contact these customers in the coming days with more details.

Just today the UK’s largest supermarket chain Tesco has capped online shoppers orders at 80 items in total for any single transaction. In an email, the firm stated:

As you know, we’re currently experiencing a very high demand for our delivery and Click+Collect slots. We’re doing everything we can to increase the number of customers we can safely deliver to. That’s why we’ll be making some changes. From today, we’ll be capping the number of items you can add to your online basket to 80. This means that if you make a change to an existing tesco.com order or place a new order, you’ll only be able to order a maximum of 80 items. To help give everyone access to the essentials, every product will still be limited to a maximum of 3 per customer.

In the US, Walmart and Target have both taken action this week to address their own supply chain pressures. Walmart has announced plans to hire 150,000 temporary workers to help with online order fulfilment. Greg Smith, Walmart’s Head of Supply Chain, said:

Our supply chain associates have been so vital to Walmart’s ability to serve customers and communities during this time, and I am so proud of every one of them. We’re growing, expanding and looking for more people who want to make a difference providing for customers.

Meanwhile Target has taken a decision to hit the brakes on previously announced plans to add fresh grocery items to its Drive Up and Order Pick Up services. CEO Brian Cornell said:

We’ll temporarily pause on incorporating fresh grocery and adult beverages into our Order Pickup and Drive Up services until later, when the team has more time to train and prepare for the changes. We’ll revisit these projects and set new dates when the time feels right. We are prioritizing the work that’s in front of us to support our team, store operations and supply chain as families across the country rely on Target for everything they need in this challenging environment.

Admitting there is “no playbook for how to react”, the CEO of one of America’s bellwether retail businesses also had bad news for anyone in the Oval Office eagerly awaiting the arrival of the Easter Bunny: 

America is essentially out of business.

My take

While the online log jam is an irritation, for me at present it’s very much a so-called ‘First World Problem’.

There are others in far greater need of access to online services than I am and I think the actions of the various online grocery platforms in the face of the current crisis have been pragmatic, responsible and socially-aware. I’ve heard delivery services being referred to as ‘the other emergency service’, which may be a cliche too far, but everyone working across the supply chain is certainly an essential worker.

What’s next? Developments this week at non-grocery retailers NEXT, River Island and TK Maxx have seen all three take the decision to close down their online platforms as well as their physical stores, in large part prompted by concern among their warehouse and fulfilment center staff about working to deliver non-essential items.

How much money that leaves on the table for such retailers remains to be seen. NEXT CEO Simon Wolfson says:

People do not buy a new outfit to stay at home.

Possibly, although ‘lockdown buying’ could become the new ‘drunk buying’ depending on how quickly boredom thresholds are passed during the current crisis. And for a firm like NEXT, there’s a lot riding on having an operational online offering. Latest figures report total online sales of £2.1 billion out of total revenue of £4.4 billion. With an online growth rate of 11% outstripping in-store numbers, it’s no wonder that the firm is reported to have offered warehouse workers a 20% pay rise to stay at their posts before taking the decision to shutter everything.

Like so much else in life, the post-Coronavirus omni-channel retail world is going to have some adjustments to make.

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