Introduction
David and Lily, who grew up operating the family Asian Supermarket in Brisbane, founded Davely’s Asian Supermarket. With over 25 years of business expertise, they take pleasure in giving their clients what they desire most: a great selection, the highest service quality, and always a warm smile. Davely’s Asian Supermarket is situated in Brisbane’s CBD and specializes in Asian goods from Japan, Vietnam, Malaysia, Korea, Taiwan, China, Singapore, Thailand, and other Asian countries. Davely’s Asian Supermarket aims to provide the most satisfactory assortment and quality Asian foods in Brisbane CBD. Davely’s Asian Supermarket has everything customers could think of and more. In addition to a tremendous variety of knowledge in the items they sell, Davely’s pleasant crew is always ready to present customers with a unique and quality experience. They pair delectable Asian dishes with Asian cuisine fans. The report seeks to provide the challenges and opportunities that Davely’s supermarket experienced during the pandemic as per the information gotten during the interview with the supermarket’s leader, David.
Further, the report will provide recommendations that the supermarkets may have actionable. The main challenges that are tackled in the information are demand risk and a disturbance in the supply chain. Davely’s supermarket leader revealed that the opportunities they experienced were a surge in demand, and they ventured into e-commerce.
Challenges
Demand Risk
The covid-19 pandemic reshaped the customers’ demand for supermarkets due to the government’s policies on lockdowns and restrictions on movements. Customers were sent into panic buying, where they stripped Davely’s Supermarket of every essential good (Davely’s, 2021). However, this panic buying is a classic illustration of what is known as a “demand risk” to supply networks – or a rapid jump in demand that throws manufacturers and supermarkets off guard.
Demand risk pertains to the possibility that projections would underestimate the quantity of product that buyers are prepared and capable to purchase. A company faces the danger of providing too much or too little consequence to fulfill demand, resulting in lost earnings and missed sales prospects (Esposito, 2020). With the surge of panic buying, Davely’s Supermarket had the isles mostly comprised of food and sanitary products being bought out by customers. The supermarket struggled to maintain fully stocked isles. This state put the supermarket at a disadvantage compared to its online competitors. When customers came and found their target products were out of stock, they turned to competitors (Davely’s, 2021). Further, with restrictions to movements and lockdown, the customers couldn’t do their traditional shopping, so the supermarket struggled to deliver their clients’ demands through online ordering and house deliveries.
Disturbance in the Supply Chain
At the start of the pandemic, there was panic purchasing, retail shop closures, and massive online demand. However, nationwide lockdowns and a ban on vehicle travel combined to disrupt the whole supply chain across the retail industry. The supply chain was affected at every point, from product suppliers through production locations and all the way to the client. Retailers lacked an effective, innovative sourcing plan, which influenced their inventory and deliveries (Engstrom et al., 2021). Retailers had to rebalance their stocks, revise their purchase patterns to favor high-demand items, and route them to places with solid sales. Retailers had to also outperform e-commerce giants in terms of shipping and delivery times.
Distributors such as the toilet paper subscription service “Who Gives A Crap?” struggled to fulfill Davely’s orders, forcing the supermarket to curtail the number of purchases by customers. The pressure on suppliers and competing supermarkets made them to increase the prices of their products. Some of the Supermarket’s suppliers shut down operations during the pandemic causing the grocer to have a niche in some of the products they offered (Davely’s, 2021). Finding new local suppliers proved to be challenging as the suppliers knew of the retailer’s need for supplies, making them hike their prices. When the Australian government-imposed restrictions on movement, Davely’s experienced delays in their scheduled delivery from suppliers.
Opportunities
The surge in Domestic Retail Demand
As the effect of COVID-19 continues to be felt, there is a great deal of confusion among Australian consumers. Consumers’ regular purchase behavior changes due to concerns about their personal wellness, job security, and finances. As the Australian government began considering and implementing movement regulations in early March, there was a rush on Davely’s store as Brisbane residents sought to ‘stock-up on numerous vital commodities. Overall, Davely’s groceries saw record growth, with March sales 18 percent higher than the same month last year (Davely’s, 2021).
Accessed from: https://www.davelys.com.au/
The shift in purchase behavior is visible in food and in various other sectors, such as home office equipment and gym equipment, as customers acclimatize to a ‘lockdown’ lifestyle. Consumer stockpiling has impacted a wide range of items across the store, beginning with domestic necessities such as toiletries, household cleaning products, animal food, and dry foodstuffs (Davely’s, 2021). This expanded to practically every category across the supermarket resulting in a considerable increase for several sorts compared to the same period last year.
E-commerce
Customers couldn’t physically come to the store to do shopping when the Australian government put lockdown and restrictions on movements. The situation forced the supermarket to find innovative means of ensuring they serve their customers. An opportunity arose when Woolworth suspended their online shopping services, creating an opportunity for Davely’s to venture into e-commerce. The supermarket added a feature of ordering products online from their website. The move saw Davely’s increase their range of service as not only people from Brisbane could access the grocer’s products (Davely’s, 2021). Online shopping will be applicable during the pandemic period and in the post-covid era. The supermarket is looking to ensure that the venture is innovated continuously by making it more user-friendly and secure to transfer the quality customer experience on shopping at Davely’s to the online platform.
Recommendations
Utilize technology to predict demand and maximize inventories
As market forces for various products vary, supermarket chains must sustain full accessibility of their supplier connection functionality to adequately monitor variability in close real-time demand for products in the areas where they are most required while maximizing stocks across the distribution chain (Nikolopoulos et al., 2021). Investment in massive data and machine learning (ML) innovations to forecast individual products and supermarket locations based on purchasing trends, the likelihood of future returns in crisis events such as COVID-19, and other variables such as temporary demand will go a long way toward assisting with demand preparation now and in the future (Nikolopoulos et al., 2021). The use of technology would help the supermarket to avoid and minimize the occurrence of demand risk.
Enhance fulfillment
A significant issue for grocers in the aftermath of COVID-19 is ensuring that consumers can buy what they need and have it delivered swiftly and effectively. Customers anticipate clear information about the status of their purchase and pickup availability when purchasing online. It becomes considerably more complicated when demand is at its most significant, as delivery windows become packed and workforce shortages limit delivery capacities (Nikolopoulos et al., 2021). Grocers must guarantee that they can leverage the range of resources accessible to them (supermarket and DC infrastructure) and maximize order completion in a timely, safe, and cost-effective manner (Nikolopoulos et al., 2021). This could include maximizing parameters such as store volume, inventory levels, delivery costs, and processing costs and organizing across all feasible fulfillment nodes such as store locations, DCs, online stores, third-party logistic support providers, extra shipment centers, and even short term hyper-local stores.
Conclusion
The pandemic caused an unforecasted surge in demand, making it hard for supermarkets to keep up with customers’ demand due to panic buying. Davely’s supermarket wasn’t prepared for the sudden sharp increase, making them experience demand risk. The rise in demand was felt further when the supermarket’s suppliers struggled to deliver the grocer’s orders. The constraints in inventory made the supermarket limit the number of goods they purchase. The increase in demand allowed Davely’s to increase revenue. The increase wasn’t only felt in the food and sanitary products, office-ware, and stationery as people adjusted to working from home. The supermarket was also able to venture into e-commerce, allowing customers to order from their website and deliver. Orders could also be done by calling the supermarket directly. Online shopping meant that the supermarket needed to enhance the fulfillment of their customers, which could be done through leveraging the range of resources available to them. Further, the supermarket would need to use technology to maximize inventory and predict demand to protect against demand risk.
References
Davely’s Interview, 2021. 7008IBA Global Business Strategy A1a group 05 interview.
Esposito, F. (2020). Demand risk and diversification through international trade. Available at SSRN 3617802.
Engstrom, T., Baliunas, D. O., Sly, B. P., Russell, A. W., Donovan, P. J., Krausse, H. K., … & Pole, J. D. (2021). Toilet Paper, minced meat and diabetes medicines: Australian panic buying induced by COVID-19. International Journal of Environmental Research and Public Health, 18(13), 6954.
Nikolopoulos, K., Punia, S., Schäfers, A., Tsinopoulos, C., & Vasilakis, C. (2021). Forecasting and planning during a pandemic: COVID-19 growth rates, supply chain disruptions, and governmental decisions. European journal of operational research, 290(1), 99-115.
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