How Retailers Are Navigating the Coronavirus

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How Retailers Are Navigating the Coronavirus

By Jamie Grill-Goodman - 03/09/2020
Almost empty rack space in a Target in Emeryville, CA, on March 3, 2020, where hand sanitizers and soap used to be. Credit: Shutterstock.

Retailers have a lot to contend with as news of the new coronavirus (COVID-19) spreads. As 45,081 patients are currently infected with the virus globally at time of press, the retailer industry is facing stock-outs and supply chain issues, store and corporate campus closings for cleanings, event cancellations, and more.

A survey of the CEOs and business executives on the Fast Company Impact Council reveals 40% say their production lines are getting makeovers, with most focusing on diverse options and avoiding bottlenecks, and nearly all have had employees cancel work trips.

"For retailers, the coronavirus is a stark reminder that global supply chains can be disrupted quickly and with dramatic effect," Keith Jelinek, managing director and co-leader of Berkeley Research Group’s retail and consumer practice, said in a press release. "While the primary concern is the public's health, the long-term implications are significant for retailers of all sizes.”

Here, RIS examines how a few retailers are specifically responding to coronavirus in the past weeks.

Quantity Limits to Avoid Stock Outs

Reports of empty store shelves are hitting the U.S. now as shoppers stockpile supplies.

Hand sanitizer sales spiked 313.4% for the one-week period ending Feb. 29, according to Nielsen Total U.S. (retail) dollar sales data. Other spikes for the week include oat milk (up 322.5%) fresh meat alternatives (up 158.3%), and thermometers, (up 80.4%) and household maintenance masks (up 475%).

The rush in sales has caused retailers to implement quantity limits on certain items. 

“Members are turning to us for a variety of items associated with preparing for and dealing with a virus, such as shelf-stable dry grocery items, cleaning supplies, Clorox and bleach, water, paper goods, hand sanitizers, sanitizing wipes disinfectants, health and beauty aids and even items like water filtration and food storage items,” Costco CFO Richard Galanti said in the retailer’s earnings call last week. “And we're doing our best to stay in stock on these and other items. We're getting deliveries daily, but still not enough given the increased levels of demand on certain key items.”

Galanti said the club store retailer is placing quantity limits on what a member can purchase “in some instances.”

“It tends to be at all locations but may differ regionally based on supply levels,” he said, noting Costco’s buying staffs both regionally and abroad are working “in some cases around the clock to procure supplies for both existing suppliers and from other sources where possible.”

Grocery chain Kroger also recently placed limits on the number of sanitization, cold- and flu-related products to five each per e-commerce order, while Publix has reportedly moved to limit in-store purchases of cleaning and sanitizing products.

“As factory closures and travel restrictions continue, retailers that have worked aggressively over the last few years to lean out inventory levels will experience shortages, while current season shipments and future season purchasing delays could disrupt revenue forecasts," said Jelinek.

Contactless Delivery

Contactless delivery is the latest retail tech buzzword, and its use has been abruptly accelerated.   

Delivery service Instacart’s sales growth rate was 10 times higher last week versus the prior week, increasing as much as 20 times in certain states, including California, New York, Washington and Oregon, Business Insider reported. The demand spike led it to roll out "Leave at My Door Delivery,” a service that allows Instacart shoppers to receive grocery deliveries without being present, rather than a traditional hand-off at the door.

Instacart had been testing the option with a group of customers for several months, BI said. 

Postmates introduced non-contact deliveries last Friday, giving its customers to options to meet their Postmate at the door as before, meet curbside, or go non-contact and have deliveries left at the door. Customers are prompted to select their delivery preference before checking out.

“We know there are always people who, for health and other reasons, might prefer a non-contact delivery experience and we believe this will provide customers with that option,” Postmates said in its blog.

Meanwhile, e-commerce grocer Fresh Direct is running this caveat on its website:

“Due to high demand, delivery time slots are filling up faster than usual so please plan ahead. Out of an abundance of caution, our delivery personnel will bring your order up to your door, but cannot enter your home at this time. Additionally, at this time, we will not be collecting bags. Please keep and reuse them or dispose of properly.”

Less in-store contact

Starbucks is temporarily pausing the use of personal cups and “for here” ware such as ceramic mugs. All drinks will now be served in disposable cups for the time being in the U.S. and Canada.

The statement released last week by Rossann Williams, executive vice president and president of U.S. and Canada-operated businesses, pledged to focus on two main priorities: “caring for the health and wellbeing of customers and partners” and “supporting local health officials and government leaders” in their attempts to contain the virus.

The company will continue to honor the 10 cent discount for anyone who brings in a personal cup or requests "for here" ware. 

Trader Joe’s is also reportedly altering the way it doles out samples to limit customer contact, and Costco has suspended samples altogether in at least some of its locations.   

Offering PTO for Store Employees

Given that many retail associates are hourly workers with varying degrees of PTO (few of which are robust), retailers are being called upon to better support their employees with additional sick leave to discourage them from coming in when they’re sick.

The Centers for Disease Control and Prevention (CDC) has issued guidelines for businesses, including developing “non-punitive leave policies” for those with contract or temporary employees.

It also recommends businesses prepare to institute flexible workplace and leave policies for employees who may be absent because of illness, caring for an ill family member, or staying home to care for children whose schools have closed.

For its part, Trade Joe’s is said to be expanding the amount of paid time associates can receive if they do get sick. The grocer reportedly told employees through April 15 reimbursement of AR [absence reserve, or sick leave and paid time off] due to respiratory illness is possible and employees that miss more than a full calendar week of work due to respiratory illness will have their personal situation reviewed by HR. — Additional reporting by Lisa Johnston

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