December 2020/January 2021 – With news that several vaccines to prevent COVID-19 have been found effective and with an expectation they will begin a roll out quickly, we can see a light at the end of this COVID-19 tunnel or, to put it another way, we can imagine a return to normalcy. What will this mean for the supermarket deli industry?
In the short term, it might not mean much at all. The vaccines are likely to be in short supply and allocated for specific groups: doctors, nurses and people who work in medical facilities. Elderly people who live in nursing homes and similar situations. Indeed, though the numbers are uncertain, achieving true “herd immunity” throughout the globe may take a very long time with requirements to give two doses of the vaccine to, maybe, 70% or 80% of the global population.
Indeed, one of the more interesting questions is how people will feel about getting the vaccine and how far our institutions will go in mandating it. In 2019, for example, laws were passed in New York State, Washington State and in Maine removing exemptions for personal belief or religious belief as a permissible excuse from public school immunization requirements. Washington’s law extended to private schools and day care centers.
One would expect to see COVID-19 added to these immunization requirements, but one can also expect that many will feel the vaccine may have been rushed, that approval should await more studies, etc. On the other hand, requirements may compel others to get the vaccine. These could be legal requirements at schools but also certain businesses. Quantas, the Australian airline, has already indicated that, at least on international flights, having proof of vaccination for COVID-19 is likely to be a prerequisite for boarding a plane.
As the world is evolving, there will be challenges for supermarket delis. Most obviously, with people not eating as much in restaurants due to legal closings, capacity restrictions, fear of transmission or a need to economize, there have been more people in supermarkets, and that has lifted everything, including the deli.
However, with a return to normalcy, we can expect less traffic in supermarkets and an overall decline in supermarket sales. Deli departments will probably try to reopen food bars, salad bars and other self-serve areas that were closed for the pandemic, but we just don’t know how consumers will react with memories still sharp.
In many parts of the country, supermarket delis do a nice lunch business with office workers. We just don’t know yet when or if they will be called back. A study found that 44% of employees said they would gladly take a 10% pay cut to work from home. If you consider the savings on not renting office space, the economics of letting people work from home may well be appealing.
Twitter announced that most employees can continue working from home “forever” if they wish.
We can’t know yet how real all this is but the roll-over effects could be vast. It starts with people working from home, but then the next step is why does home have to be in high-priced San Francisco? If remote work is viable, for the price of a condo in San Francisco, one can have a mansion in Montana. Probably some people will want that. This poses some challenges as to how stores in less dense areas can offer the assortment consumers want.
Right now, delivery has been super-hot as people want to avoid contact in the stores. Will this be a new habit that everyone will continue? Or, maybe, people hate paying tips… don’t like people knowing where they live… and don’t like waiting even a minute, much less scheduling a delivery. Maybe they want the flexibility of deciding to eat out or pick something up on the way home from work.
It is also possible that people will want something different. Maybe they won’t feel comfortable going to a salad bar and making a Greek salad, but would like a nicely-sealed package of a fresh, beautiful, Greek salad. Do we actually know how to deliver the variety people will like, without them feeling at risk? It is unclear.
There is surely a tough battle ahead. Supermarket delis have been challenged all during the pandemic, as many of the higher-profit bars and stations have been closed. Consumers also had more spare time to cook and were more budget-conscious, so they didn’t need some of supermarket delis’ most profitable services. If things advance well with vaccines, people may want to eat out more, socialize and avoid the locations, like supermarkets, that remind them of where they went during the pandemic.
Obviously a healthy, productive population, not living in fear, is a great thing. It also is a fabulous opportunity for retailers of all types. But it would be a mistake to assume that tomorrow will be like yesterday, and the best deli executives are working hard now to develop the options that will work in a post-COVID world. DB