business news in context, analysis with attitude

From the Wall Street Journal:

"If the Covid-19 outbreak provides a global test for buying food online, it is one that supermarkets are by and large failing. Yet their e-commerce businesses should be in a different league after the crisis.

"Since the pandemic began, the websites of major food retailers have been as inundated as their physical stores. Pressure on these still-small online operations is only likely to increase as more nations place their populations on full lockdown."

Walmart's website traffic alone grew 55 percent between March 1 and March 20, while "Kroger, Peapod, Instacart, Carrefour and Tesco have also experienced big surges in daily traffic."  However, "although supermarkets have invested heavily in their online businesses in recent years, they are not ready for current levels of demand. Infrastructure is still immature globally."

The Journal goes on:  "Some retailers are betting that the extra demand will stick. Ahold Delhaize, owner of the Peapod delivery service, has doubled its server capacity in the U.S. since the crisis began. Its website will be able to handle much higher order volumes after the spike subsides.

"The rush of orders is bringing some benefits. Online grocers are learning how to allocate delivery slots most efficiently in times of peak demand. They are testing in real time how different order-fulfillment methods, such as manual picking in stores or from dedicated online warehouses, perform under stress."

KC's View:

It is an unknown whether changed consumer behavior will be sustained when the current situation begins to resolve itself, but my bet would be that many (not all!) shoppers will realize that there is absolutely no benefit in going to the store for Oreos, Tide and Corn Flakes … but that there can be enormous benefits in going to a store with a compelling value proposition and differentiated products and services.

Which then leaves it up to retailers to actually be compelling and have differentiated products and services.  Don't give me that "we'll always be successful because we're local or hometown proud or from the neighborhood" crap.  Little of that matters anymore, if it is the extent of the value proposition.