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Retailers prepare for coronavirus stockpiling

Disinfectants, bottled water and canned goods are flying off shelves and Nielsen says this will likely shift to shelf-stable and frozen foods, too

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Retailers are bracing for a run on staples like water and canned goods as consumer fears about the coronavirus continue to escalate, with Nielsen predicting it will have an “almost immediate” effect on supply chains for the most sought-after items.

Nielsen said in a report that efforts to build so-called “pandemic pantries” have been particularly pronounced in China, the U.S. and Italy. Stocks of face masks and hand sanitizers have already dried up in some markets, it said.

There has also been a spillover effect on other grocery items. In the U.S., dollar sales of oat milk have increased by more than 300% as fears about the coronavirus took hold, and there have also been double-digit sales increases for fruit snacks, pet medicine, dried beans and energy beverages.

Nielsen said there’s “little doubt” that buying will shift toward shelf-stable and frozen options as consumers assess what items can be kept for long periods. Frozen fruit sales in the U.S., for example, were up 7% for the week ended Feb. 22.

Stories also continue to emerge about grocers placing limits on certain items to prevent shelves from being cleared. The U.S. chain Kroger, for example, has limited sales of sanitization, cold and flu-related products to five per order. Major Canadian grocers including Costco declined to comment for this story, with a company spokesperson saying only: “As always, our focus is to have merchandise available for our members at low warehouse prices.”

In an email to CSNC sister publication Canadian Grocer, Andrew Fuchs of Food & Consumer Products of Canada, said there are clearly areas in which consumer demand continues to increase, including non-perishables and household products, and manufacturers are responding to address the surge in demand and to ensure inventory levels can handle any additional demand moving forward.

“The difficulties are in the variables,” said Fuchs. “That’s why it’s so critical for retail and supply to be working hand in hand through this period since retail is at the front lines of customer demand, they are our eyes and ears.”

Nielsen also expects to see an increase in categories adjacent to health items like face masks and hand sanitizer, such as aerosol disinfectants. It also expects an increase in sales of hand lotions and body lotion, since the increased emphasis on hand washing and disinfecting will negatively impact people’s skin.

Sylvain Charlebois, senior director of Dalhousie University’s Agri-Food Analytics Lab, said about one-quarter of Canadian households currently have sufficient food supplies to last for three to four days regardless of a coronavirus outbreak, but predicted more than 10% of households would look to stockpile important items.

Charlebois said “panic buying” by consumers has the potential to negatively impact supply chains, noting that the introduction of cost-cutting measures such as lean manufacturing, offshoring and outsourcing that have been put in place by companies in recent years could exacerbate the problem.

However, Charlebois said fears about a widespread supply chain crisis are misguided. “Most regions in Canada are serviced by retails [that] have emphasized investment in logistics and supply chains over the years,” he noted. “The prospect of some areas of the country running out of food is highly unlikely.” Remote regions are likely the most vulnerable, he said.

One of the areas where there could be a spillover effect is e-commerce, with Nielsen noting it expects to see an increase in online shopping if fears about the coronavirus do take hold. Meanwhile, a study conducted by research firm IMI on the impact of the coronavirus on people’s intentions found that 9% of Canadians—compared with 8% of Americans—are less likely to go to the grocery store in the next three months.

Online delivery service Inabuggy has seen an approximately 35% increase in the volume of orders over the past two weeks, with increases on items such as face masks, water and non-perishable items like canned tuna. “It sounds like a little bit of panic has set in, and people are ordering these products that they don’t normally order as much of,” says CEO Julian Gleizer.

Inabuggy has already suspended the purchase of items like hand sanitizers and face masks because they have become difficult to source, says Gleizer. “It makes no sense if a customer comes to Inabuggy and orders a box of face masks and they’re not available,” he says. “That’s not the experience we want to pass on to our customer.”

RELATED READ: Coronavirus and the rise of panic buying

Originally published by Canadian Grocer.