Aurora Magazine

Promoting excellence in advertising

Pivot to Delivery and Digitisation

How retail and delivery services have adapted to the ways consumers are changing where and how they shop.
Updated 13 Aug, 2020 03:20pm

From the fanciest restaurants to the most popular grocery stores, all types of businesses are struggling to keep up with the many challenges the Covid-19 pandemic has brought with it, and as businesses take innovative measures to stay afloat, consumers too are changing the way they shop and spend.

When the lockdown was imposed in March, retailers initially struggled to keep up with demand for essential items such as flour, sugar and oil due to panic buying, which in turn caused supply and distribution bottlenecks. In some cases, panic buying reportedly pushed demand for essentials up by 20-30%. As Syed Muhammad Salman, Head of Marketing, Promotions and Partnerships, Naheed Supermarket, puts it: “such an upsurge in demand for items such as flour and sugar was completely unforeseeable. Some products have an in-built production flexibility that allows for a 10 to 20% upsurge in demand, but when demand crosses the 20% mark, it takes time to meet it.”

For Jean-Marc Dumont, Country Manager, Carrefour Pakistan at Majid Al Futtaim Retail, one of the main challenges for Carrefour was the inter-province mobility restrictions. “Ensuring timely delivery of stock has been a challenge. However, we are working closely with our suppliers to ensure continuous availability of all essential products and at reasonable prices, so that our customers do not resort to panic buying or experience increases in their shopping bills.”

Similarly, Muhammed Sheikh, Director, Al Fatah, observes that “it became imperative to build up as much stock of essentials as we possibly could. However, the panic was so strong among consumers that many products became scarce, especially imported ones.”

Staying Home Effect

Retailers have noted changes in consumer spending for non-essential products as well. According to Dumont, there has been an increase in demand for electronics, office supplies, printing devices and disposable products. “People seem to be looking for products to help them work more efficiently from home.” To this list, Sheikh adds higher demand for hair dyes, trimmers, skin care products (closed salons), baking equipment and children’s toys and board games.

The lockdown and the consequent shorter business hours have led to decreasing footfall in stores and conversely significant rises in online orders. To facilitate this trend, some stores have turned to third-party delivery/courier services. For example, Nazia Khan, Manager Marketing, Condis Superstore, says that Condis are collaborating with Foodpanda to fulfil increased online orders. Al Fatah is also collaborating with third-party logistics vendors for the delivery process and have moved employees from other departments (closed at the moment), to assist with internal e-commerce operations. Naheed has imposed a limit of 200 to 300 online orders per day to efficiently cater to customers; they also have a fleet of 30+ riders and are working with courier services such as Leopards and TCS.

The increase in online shopping is reflected by the findings of Pakistan’s first E-commerce Index Report released in April 2020 by Daraz. According to the Index, sales of FMCG items on alone doubled in March 2020 and are expected to increase to 70%. DFresh (Daraz’s fruit and vegetables service) has seen orders surge nine times the usual amount. The Index further shows that the preferred modes of payment have seen significant shifts from COD in favour of digital solutions and that digital payments now represent 32% of the total customer spend.

Supporting this trend, banks have seen digital transactions increase at a phenomenal rate since the lockdown. According to Sagheer Mufti, COO, HBL, a comparison between the period March 1 to 15 (pre-lockdown) and April 1 to 15 (post-lockdown) shows that the number of people who downloaded HBL’s mobile app went up by 42%. Similarly, the number of people using HBL’s internet banking over the same period has gone up by 61%. HBL Konnect, which caters to the non-banked population, gained close to 4.5 million users since its roll-out in late 2018 and since the outbreak acquired 60,000 new accounts. Mufti says HBL created massive public awareness about the benefits of digital banking via a three-pronged approach media campaign.

“One of the objectives was to assist customers who were not comfortable with online banking to set up their HBL app or IB. This crisis has made people realise they need to act differently, including adapting to digital solutions.”

Meanwhile, Faheem Elahi, Acting Head of Retail Banking, Standard Chartered Bank Pakistan (SCB), says that although Covid-19 could impact the onboarding of new clients (due to minimal face-to-face client interaction), “the awareness and usage of digital banking is expected to increase significantly.” In order to encourage the shift to digital, SCB is heavily promoting its digital banking facets via electronic digital mailers (EDM), social media posts, SMS, video walls in branches and more.

Moving Into New Territory

Delivery and ride-hailing services, such as Bykea and Foodpanda, have seen significant declines in their core business model post-lockdown and although the lockdown has eased, it will take time for their operations to get back to normal. As a result, these companies have moved into new segments to stay operational.

Nauman Sikander Mirza, CEO, Foodpanda, says that “the lockdown has impacted our core business as the demand for services has changed. Instead of food, customers are looking for delivery services that can bring groceries, fruit and vegetables and medicines to their doorstep – this is why we launched Panda Mart (the company’s grocery delivery service) earlier than originally planned.” He also believes Foodpanda can help those restaurants that have now reopened but on a takeaway/delivery basis. “We plan to reach out to as many restaurants as possible by waiving on-boarding fees and other charges.” Furthermore, in January 2020, Foodpanda launched their Home Chefs programme for people who cook at home and given the current crisis, the company aims to generate business for 100,000 home cooks across Pakistan by enabling them to earn a living by fulfilling orders on Foodpanda.

For Bykea, the main issue post-lockdown is the fact that their business model was primarily taxi based. As Muneeb Mayer, Founder, Bykea points out, “Double sawari is banned and ride-hailing is suspended, so that part of our business is dead. In the first week of March, there was a 10% decline in the number of customers and by the second week, it went up to 15% and then when we suspended the app – boom! It went to zero. Is it bad? It’s disastrous.”

According to Mayer, unlike other delivery services, Bykea’s main customer base is made up of wholesale retailers. “Most people in the middle and upper-middle classes perceive Bykea as a concierge service, whereas in reality this only accounts for five percent of our business – our primary customers are the wholesale dukandaars who need to send stuff from their depot to other parts of the city.” Now, to cater to these wholesalers in these times of financial instability, Bykea are enhancing their distribution capabilities.

“Until Eid-ul-Fitr our focus will exclusively be on getting food supplies to kiryana stores. Our objective is to facilitate businesses with low traffic thresholds so that small customers will no longer be restricted in their ability to ship multiple products to multiple destinations – something that is particularly important for SMEs.”

Strengthening Communities

According to Mufti, brands need to ensure they play their role in supporting the communities they do business with. To this end HBL is involved with delivering the government’s Ehsaas Emergency Cash Programme to beneficiaries and providing food to frontline workers. Foodpanda is operating a programme called Feed the Frontline Workers, whereby they deliver free meals to frontline workers across Pakistan; they are also working on collecting funds for daily wage earners. In April, Daraz launched Humqadam, aimed at assisting SMEs that want to enter the e-commerce space, but do not have the finances to do so. In this respect Daraz is offering a subsidy of 45 million rupees and inviting SMEs to establish their online ventures on their platform, without charging commissions for May and June.

Mayer adds: “My two cents worth is that people need to get out of Facebook and WhatsApp and actually start doing stuff. Too many people are talking rather than doing. If you want to bring the economy back, haath payr to maarnay hon gaye aap ko.”

As businesses modify operations and explore new spaces and consumers increasingly turn to online retail, the long-term prospects for the economy remain uncertain. The only certainty is that getting back to ‘normal’ will take time.