Is COVID-19 Eating Jobs Away?

As consumer needs and industries evolve in a post pandemic world, the job market will change drastically too.

According to Maslow’s hierarchy of needs, physiological needs are the most basic needs of an individual for physical survival, with food being one of them.

Following the declaration of a worldwide pandemic by the World Health Organisation (WHO) on March 11, and the lockdown imposed by countries, the F&B sector in food retail and foodservice have seen a tale of two cities.

With F&B establishments only allowed to offer takeaway and food delivery, businesses have seen 50 per cent drop in sales and expecting sales to be worse in the upcoming months. To put into context, in China, HaiDiLao has suspended operations and from a six-day closure for the company in January accounts for 1.5 per cent for its estimated 2020 sales.

To keep up with the changing behaviour of consumers, many F&B retailers have switched their model from an offline to online model partnering with food delivery partners such as Grab and Food Panda.

However, these platforms charge 35 per cent commission, eroding already thin margins. Having little to zero sales, F&B companies have resorted to renegotiate rental terms with their landlords, delay or cut wages, and even lay off workers, in order to hold on to cash.

On the contrary, sales have spiked across all online and offline supermarkets due to the tsunami of demand from anxious consumers. Grocery delivery app downloads and order volumes have seen a surge since the outbreak of COVID-19, resulting in difficulty to cope with the orders.

Tesco online reported a full schedule of its delivery services next month, Happy Fresh has seen a 10 per cent spike in orders and Meituan has received four times more grocery deliveries. Shelf movements of food staples at offline stores are fast, eventually leading to the inability of aligning the pace of inventories being restocked.

Notably, one of the biggest issues in the industry lies within the shortages of labour along the supply chain. As demand soars, a more rapid movement of goods along the chain is necessary, which is likely to require more manpower due to the lack of automation at this stage.

Walmart is looking to hire 150,000 staff; Aldi to add 9,000 staff, and Tesco is looking to add 20,000 workers; even grocery startup Instacart is planning to add another 300,000 shoppers in the next three months.

Another point to note is the food supply chain, as younger workers migrate to an urban population, we have seen a lack of farm workers. In the US, this has been exacerbated by President Trump’s immigration policies.

In somewhere like Malaysia where we are self-sustaining as food supplies however, we have seen logistics impacted by the Movement Control Order where state borders are now closed. Fresh supplies from Cameron Highlands, for example, have been reduced by 30 per cent due to market closures.

The concern is further aggravated when a number of countries started imposing export restrictions on major crops – countries that are heavily reliant on food imports would be among the first victims of such action. Vietnam, for example, has curbed rice exports, Russia has halted processed grain exports and Kazakhstan has suspended exports of flour, oil, and vegetables.

At this critical point of time, it is crucial for sectors and industries, or even countries, to work hand in hand to mitigate the food supply chain crisis. Unemployment that arises from the foodservice sector should first be channelled to the food retail and supply chain where a severe understaffing problem is apparent.

Public transportations that are currently operating at a lower capacity, such as buses and trains, could provide support in terms of movement of goods across different states.

Governments should avoid trade barriers or restrictions among countries, particularly on essential goods, as this could potentially accelerate food price inflation when supply becomes limited.

 

              The article was originally published on e27