Reshaping the Food Retail Industry Post-COVID-19

A new survey has highlighted weaknesses and provided insights on how food retailers in Asia can address these issues, reshaping their business post-pandemic.

The global outbreak of COVID-19 has severely impacted the health and livelihoods of millions. However, it has underscored the critical role of grocery retailers in society. Consumers have pressing needs for food and health products, especially during such a crisis, relying heavily on retailers to meet these demands. The short-term priorities for food retailers became evident: protecting the health of employees and customers, maintaining business continuity, establishing crisis management command centers, and aligning supply chain productivity with demand — for instance, reducing product variety, reconsidering promotions, or introducing new products.

To better understand how COVID-19 has influenced consumer spending and expectations, McKinsey surveyed over 5,000 consumers across seven Asian countries. Nearly 70% of respondents in Thailand and 53% in Indonesia expressed significant concern about the pandemic's impact on their livelihoods. In Australia, China, and South Korea, the numbers were lower (around 31-40%) but still considerable.

These countries are at different stages in managing the pandemic, with each government taking varied actions. However, the surveys revealed several common changes in consumer behavior across all seven nations, trends likely to persist. This situation demands swift action or acceleration of ongoing changes from food retailers in four key areas

1. Reimagining Safety, Health, and the Scope of Supply Chains

Tính an toàn trong ngành bán lẻ thực phẩm bối cảnh COVID-19
Safety in the Food Retail Sector Amid COVID-19

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Despite cultural and regional differences, consumers in these countries prioritize safety in stores and prefer safe, nutritious, locally sourced products.

•  Safety Concerns: One in five Australian respondents and more than half of Thai respondents fear shopping outside. Hygiene is a critical factor in the shopping experience, with similar importance expected in the future when choosing where to shop.

•  Health Focus: Consumers have become more health-conscious due to COVID-19. In all countries except China and Japan, over three-quarters of respondents are focused on boosting their immunity through exercise and healthy eating. There is a notable increase in the consumption of health-related products (e.g., fresh foods, eggs, dairy, and bottled water) and a decrease in alcohol and snack intake.

•  Local Brands Preference: Consumers show a strong preference for local brands over foreign ones across all categories. For example, over 80% of Australian consumers prefer local brands since the outbreak, while in China, only 43% of consumers favor foreign brands.

To meet these new consumer behavior trends, retailers should reshape their services to offer more local products (both food and processed goods) and minimize environmental impact. Ensuring consumer safety in both in-store and home delivery experiences, such as using self-checkout technology or cashless transactions, is essential.

2. Reimagining How Technology Can Support Delivery and the Value Chain

Sự hỗ trợ của công nghệ trong ngành bán lẻ thực phẩm bối cảnh COVID-19
The Role of Technology in Food Retail Amid COVID-19

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Survey results indicate a significant shift in consumers purchasing food online, with no return to traditional channels in sight. Based on this, retailers should consider digitalizing their stores.

•  30-70% of respondents in most countries no longer prefer dining out, opting instead to buy prepared food from retail stores.

•  Online food shopping frequency and spending have increased by 16-70%, with consumers enjoying this convenience and intending to continue. Australia and Japan are exceptions, where online delivery faced constraints and behavior remained unchanged, respectively.

•  Consumers in all countries prefer self-checkout over cashier assistance. In Indonesia, 40% of retailers plan to use more self-checkout systems in the future.

To tackle the current crisis and prepare for future challenges, food retailers should use technology innovatively  to scale e-commerce and home delivery capabilities. Collaborations with last-mile delivery services and cold storage facilities, extending warehouse shifts, using mixed picking models, and converting some retail locations to online fulfillment centers are viable options.

Retailers can also enhance their business operations and consumer experiences with technology, not only through self-checkout but by revamping their entire business process for safer customer interactions. Technological adoption will also necessitate changes in human resources, such as retraining staff or outsourcing.

3. Reimagining Product Pricing Strategies

Chiến lược giá sản phẩm trong ngành bán lẻ thực phẩm bối cảnh COVID-19
Pricing Strategies in Food Retail Amid COVID-19

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In past crises, consumers leaned towards private labels. After the 2008 financial crisis, 60% of American consumers preferred reasonably priced basic goods over new, costly products. Our current research indicates consumers expect tougher times ahead.

Như đã đề cập ở trên, người tiêu dùng đang lo lắng về tác động của đại dịch đối với thu nhập cá nhân của mình. Ở hầu hết các quốc gia, từ 30 - 40% người tiêu dùng lo lắng về khả năng kiếm sống của họ; ở Thái Lan, con số này là 70%.

•  Consumers worry about the pandemic's impact on their income, with 30-40% concerned about their livelihoods; in Thailand, this figure reaches 70%.  Up to 50% of surveyed Chinese consumers are reducing expenses due to the pandemic's complications.

To address these changes, food retailers should rethink their promotional strategies to save marketing costs, reserving funds for critical times to stimulate demand, whether for regular products or essential goods based on consumer needs.

4. Reimagining Customer Loyalty

Lòng trung thành của khách hàng trong ngành bán lẻ thực phẩm bối cảnh COVID-19
Consumers Loyalty in Food Retail Amid COVID-19

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During the COVID-19 crisis, consumers have shown loyalty to retailers that consistently provide essential goods.

•  Location and Availability: The main reasons for changing stores are location and product availability (often fresh produce). In most countries, promotions or discounts are no longer primary factors for switching stores.

• Except in Japan and South Korea, 30-50% of customers have changed their shopping locations, primarily due to fresh produce availability and proximity. In some countries, nearly 50% have not returned to their previous stores.

•  30-70% of customers have tried new brands. In China, 20% of consumers are the least likely to revert to old brands. To address this "loyalty shock," retailers should identify stores affected by customer shifts. Targeted marketing can help regain lost customers by showcasing efforts to improve customer experiences, fostering consumer empathy and encouraging them to return.

By reshaping their business in these four areas, food retailers can create new job opportunities, redefine the F&B ecosystem, and collaborate effectively with partners during and after the pandemic.

Retailers' responsibilities extend beyond meeting consumer needs; they play a vital role in safeguarding the health and employment of millions.


McKinsey's research reveals significant shifts in consumer purchasing behavior, with a growing preference for health-oriented products from nearby locations.

Retailers need to enhance the shopping experience, from promotional policies to safety and hygiene measures, and technology upgrades for automated payment and online shopping. Leaders can refer to the latest consumer behavior data in Vietnam's FMCG sector from Kantar's latest report.báo cáo ngành fmcg sáu tháng đầu năm 2020 của mckinsey

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This article was translated from  "Reimagining Food Retail In Asia After COVID-19. Retail Practice. McKinsey & Company".


Kuijpers, D., Wintels, S. and Yamakawa, N., 2020. Reimagining Food Retail In Asia After COVID-19. Retail Practice. McKinsey & Company.

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