5 minute read
The changing landscape of groceries
kai yoshida
As the world shut down, the grocery industry thrived with more customers than ever before and the landscape of the food industry was transformed.
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The food industry is swayed dramatically by supply and demand. With the arrival of the pandemic, drastic effects have taken place. Perhaps surprisingly, the demand for many food items have actually gone down, and producer prices, prices paid to the producer for their goods, have dropped significantly. According to the U.S. Bureau of Labor Statistics, the producer prices of eggs and raw milk have decreased the most. From January to June 2020, their prices fell by 36.2% and 35.1%, respectively. Furthermore, dairy products have also been reduced by 2.2%.
Why is this? When the world went into lockdown, the dairy farmers’ biggest consumers stopped buying: restaurants, cafes, and coffee shops all closed. Unsurprisingly, there became a vast milk oversupply, and only so much could be donated to the food banks. Raw milk spoils quickly and cannot be preserved unless it is turned into cheese or other dairy products. Before shops partially reopened, the Dairy Farmers of America (DFA) estimated that 3.5 million gallons of milk went to waste every day. The newfound surplus of milk led to a drop in milk and dairy producer prices.
Unfortunately, the producer price does not correlate with the consumer price, which are the rates people pay at grocery stores. On the other end of the spectrum, grocery products are in high demand as people stock up on food, following the lockdowns.
“I do the shopping for two households now since I do not want my elderly parents to have to venture out to a grocery store. I also pay more attention to sales,” Carolyn Wallace, an English teacher at Carlmont, said.
Increased demand for products means increased prices. The consumer price of food rose by an average of 3%, according to the United States Department of Agriculture (USDA).
In contrast to the producer price, the consumer price of dairy products increased by 2.1%.
However, the most drastic price increase was seen with beef and veal. This can be traced back to the closure and limited production of meatpacking factories. In the early stages of the pandemic, several outbreaks occurred in the processing plants. In July, the CDC estimated that 9% of the total U.S. COVID-19 cases consisted of workers from meat processing plants, and eventually led to a price jump where beef and veal prices increased by 20.4% at supermarkets.
“I definitely have noticed an increase in prices, and I do look for sales in order to keep my food costs down. These days, more than before, if I find a sale on something I need or enjoy, I will buy more than one of the products. I do admit that even though meat prices have gone up, I still buy the occasional steak,” Wallace said.
The pandemic has not only affected the prices of foods and let traditional grocery stores prosper but has also been a boom for a complete-
Art By Kai Yoshida
Bakery
Art By Kai Yoshida
ly different shopping method: online grocery shopping. Pre-pandemic, online groceries only accounted for 3 to 4% of sales, and in August 2019, sales reached $1.2 billion; soon, that figure skyrocketed to $7.2 billion in June.
“Before the pandemic, many families already depended on Instacart to get groceries delivered to their doorstep. The pandemic turned Instacart not only into a household name but also an essential service, especially for seniors and other high-risk groups. Our order volume grew rapidly at the beginning of the pandemic and has remained high throughout the summer,” said JJ Zhuang, vice president of engineering at Instacart. This San Francisco company handles an online grocery service in the U.S. and Canada.
This method of buying food has been gaining traction over the past few years. The most popular companies are relatively recent establishments such as Amazon Fresh, founded in 2007, and Instacart, founded in 2012.
Online shopping has been the optimal option for some people during the pandemic. Shoppers do not need to risk their health by physically going to the store and can bypass long lines due to capacity restrictions. Also, it saves a lot of time; there’s no need to walk down in popularity with 202% more online aisles looking for food, or wait in cashier grocery web searches, potentially marklines, or driving to the supermarket in ing a permanent change to the grocery the first place. But for others, it is not industry. Many companies have taken their cup of tea. advantage of 2020; Instacart’s order
“I have never explored online food volume has surged by 500%, and they shopping, mostly because I feel more responded to the situation by doubling confident handling my own purchases their workforce. rather than having others pick out gro- This increasing popularity may carry ceries for me,” Wallace said. on past the pandemic, and in the future,
The biggest weakness of online gro- online grocery shopping may become cery shopping is that one cannot hand- the primary option for the masses. pick their items, especially produce. And “COVID-19 certainly accelerated the that is a deal-breaker for many. While pace of this transition by making a lot still a work-in-progress, companies focus more people aware of the need, the ease, their attention on the grocery staff and and the dependability of online grocery their ability to pick out the best fruits shopping. We believe if we do right and vegetables. by our customers by laser focusing on
“The freshness of produce matters customer experience, many of the new a lot. When onboarding new grocery customers who came to Instacart during staff, we provide comprehensive in-app COVID-19 will stay with Instacart training, with a lot of focus on guiding even after the pandemic,” Zhuang said. shoppers to pick the best groceries. “They’ll see that online grocery shopping Customers are notified when a shopper can save them valuable time, making starts shopping and are encouraged to refreshed food and healthy eating much have real-time two-way communication more accessible.” with the shopper about specific needs,” Whether or not these online grocery Zhuang said. “We also pay a lot of atten- companies become mainstream in the tion to customers’ feedback about the future remains to be seen. However, groceries they receive.” these companies, like the grocery indus-
Over the past months, online grocery try in general, have flourished during shopping has gotten a massive boost this pandemic.
