The impact of pandemic on retail stores: the case of metro cash and carry

Pakistan problems and solution.

Aim: The aim of this case study is to analyze the changing patterns of retail stores during
pandemic and the shift in operations by using retail strategies.

Synopsis/Executive Summary (abstract)

Covid-19 is first and foremost a health crisis, it is also a serious economic crisis globally,
impacting consumers, companies, industries and nations in all parts of the world. Because of
restrictions introduced to prevent the transmission of the deadly virus, new ways to work,
interact, and take care of daily chores, such as grocery shopping, have emerged affecting both
individual consumers and businesses. The world’s merchandize trade is expected to fall by
between 13% and 32% in 2020 due to the Covid-19 pandemic (World trade organization, 2020) ,
and while the long-term effect of Covid-19 on the retailing sector is yet to be determined, its
short-term effect has already been substantial. This study will focus on the retail store Metro
Cash and Carry, and more specifically on grocery shopping. The retail grocery industry has
during the immediate phases of Covid-19 witnessed changes in collective patterns of consumer
behavior, even a radical change in demand for certain products, online shopping and home
delivery services. To a degree these changes result from restrictions and recommendations from
national governments and different local and global authorities to protect especially persons
belonging to a Covid-19 risk group, but also from drivers in the minds of the consumers to
protect themselves, the ones close to them and people they meet, or are in contact with. Retailers
such as Metro Cash and Carry of essential products such as food and healthcare have, due to
increased demand and requirements, faced challenges of inventory, logistics management and
keeping their stores a safe environment. On the contrary, retailers of non-essential goods, such as
apparel and footwear, have faced plummeting sales and a need to develop new ways to hold on
to customers, who are working remotely and shopping from their home, just to stay
afloat (Roggeveen & Sethuraman, 2020) . In crises retail consumers change their preferences
regarding such things as what goods to buy, where to shop and how often (Nie et al., 2010) .
Consumers are also likely to learn or develop new shopping routines due to a crisis like Covid-
19 (Roggeveen & Sethuraman, 2020) . Understanding consumer buying patterns emerging in
crises plays an important role for the success of any business organization (Sharma &
Sonwalkar, 2013).  
METRO Cash and Carry declared its operations in Pakistan in January 2006 and has
since established itself as a potential market leader in self-service wholesale and grocery retail.
METRO Cash & Carry Pakistan opened its first wholesale center in Lahore in October 2007 and
now operates 5 wholesale centers, 2 in Lahore, 1 in Karachi, 1 in Faisalabad and 1 in Islamabad.
The country head office of the organization is situated in Lahore. The current number of workers
in these stores is about. 1176, including Head Office & 5 Wholesale hub.
Metro cash & carry Overview
Metro cash & carry identify themselves as "Market Leaders" wholesale and retail
business. This argument is based on an attitude to their key competition. The strategic edge on
which they succeed in the industry is cheap pricing and a high degree of service at the same
place of comfort. METRO sells food, hardware, car parts and many more households at the same
location and the key reason is low costs and ensures a high-quality standard. To this end, they
negotiate directly with companies for the procurement of their goods, so that the comparative
edge can be further strengthened. Annual revenues of Metro are forecast to hit 40 billion Rs in
2017 compared with 38 billion Rs in 2016. It has now nine stores in four of Pakistan's major
cities - Karachi, Lahore, Faisalabad, Islamabad, and 12% future customer entry - after its merger
with House of Habib. The sales volume and inventory of each stores is around Rs 300 million to
Rs 350 million. Every shop is distributed over 5,000 squares of metrics.
METRO cash and carry during the immediate phases of Covid-19 observed shifts in the
collective trends of customer behavior, including a dramatic shift in appetite for such goods,
internet shopping and home delivery services. To a certain extent, these improvements are the
result of restrictions and guidelines from national policymakers and numerous local and global
bodies to protect, in particular, individuals belonging to the Covid-19 danger community, but
also drivers in the minds of customers to protect themselves, others close to them and the people
they visit or are in touch with. Retailers of essential goods, such as food and healthcare, have
encountered difficulties in inventory control, distribution management and maintaining their
stores in a secure atmosphere due to increased demand and requirements. On the other hand,
manufacturers with non-essential products, such as clothes and boots, have had to confront
soaring sales and the need to find new ways to keep back consumers who work remotely and buy
from home only to stay afloat. In recession retail buyers are shifting their choices on items like
what to buy, where to shop and how long. Consumers are also expected to learn or build new
shopping habits as a result of a crisis like Covid-19.

Findings
Panic-Buying
In the very beginning of the Covid-19 crisis there were many consumers, who
overreacted to the new and uncertain situation by panic-buying goods, to the point of attracting
media attention. Goods bought were long-lasting food or perceived “survival products” such as
toilet paper, canned food, pasta, rice and frozen products. Also, cleaning and hygiene products
were on very high demand. The empty shelves raised further questions, among consumers and
media, of possible food shortage. This again fueled further anxiety and even more consumers
seemed to be panic buying. Retailers, different organizations, authorities and politicians urged
consumers to be rational.
Changes in Cooking Behavior
The closing of schools and strong recommendations to remote working changed cooking
behavior in homes. First, the consumers began to purchase groceries in larger quantities on
weekly basis (i.e. growth of the average value of a purchase) to cook for everyone staying at
home. Essentially, this meant that all the food consumption at schools (schools provide one
warm meal a day per pupil) and at workplace restaurants was replaced by home cooking.
Second, consumers also started the bake more than normally. Based on an expert opinion
in one news article this phenomenon could be explained by people in crises starting to rely on
traditions (MTVuutiset.fi, April 8, 2020). Traditions and going back to old ways of doing things
may give comfort and a sense of security. Eager baking could also relate to practicalities such as
that grocery purchases amid Covid-19 were more in-frequent and products like fresh bread
would not last long enough. Baking may also have served as a welcome pastime as people were
staying more at home.
Increased Sensitivity towards the Shopping Environment
Consumers renewed their shopping procedures when it came to hand hygiene, safety
margins, planned and speedy shopping, visiting during less busy hours, visiting the store without
family members, reducing shopping frequency and using contactless payments. This increased
sensitivity towards the shopping environment was also strongly urged by authorities and
retailers. For examples, gloves of different kind and hand sanitizing were used extensively by
consumers, and physical distancing was accomplished by stores’ queue marking and plexiglasses
to protect cashiers. Also, new services, such as special opening hours for risk groups and phone
services with home delivery, became popular among elderly (70+) to reduce risks of exposure to
the virus.
Switching to Online Grocery Shopping
Possibly the biggest change, and the most written about phenomenon during the initial
stage of Covid-19 in grocery retail was the strong consumer demand for online grocery
shopping. Several news articles, analyzed for this study, reported exceptional increases in online
grocery sales. For example, Kesko, a Finnish retailing conglomerate, reports an 800% increase in
online grocery shopping amid the corona crisis (Yle.fi, April 28, 2020). This sudden increase in
demand surprised many retailers, and especially item-picking and home delivery services
became under immense pressure. Online grocery stores were so crowded that customers had a
hard time finding a suitable time slot for both self-pick up and home delivery. The delivery times
ranged from several days to weeks.
Increased Interest in New Service Concepts
The restaurant business suffered severely from the Covid-19 crisis. Restaurants were
closed on the 3rd of April but take-away and different home delivery services were still ongoing.
Covid-19 basically took the customers away from restaurants and moved them to the grocery
stores. To compensate for the plummeting sales, many restaurants quickly shifted gears and
began to offer home delivery services, which attracted a great consumer interest. Subsequently,
home delivery services grew to such extent that restaurant food seemed to become more routine
in homes.
Careless In-Store Consumer Behavior
The COVID-19 virus has already led to a number of workplaces shut-downs and
quarantines. Retailers must provide a strategy that guarantees the wellbeing of workers while still
attempting to sustain business as normal. Beyond simply creating a crisis communications plan,
retailers had been thinking about how they will manage their workforce under various different
scenarios. In METRO most consumers seem to have prudently followed the instructions
regarding safety distancing and hand hygiene when shopping, but still frustration from both retail
and other clients has been documented that some shoppers are neglecting the safeguards and
have not changed their actions at all. In the interview, METRO expressed its annoyance at
consumers' casual conduct in shops. Some don't care at all more than 6 per cent of workers
perceived that customers don't at all keep a healthy distance in the cashier and 22 per cent
perceived just sporadic safety distances from customers in the cashier.

Discussion
This study set out to identify changes in patterns of consumer behavior as regards grocery
shopping in the initial phase of the Covid-19 crises in case of Metro Cash and Carry. The above
findings summarizes the six identified themes from a qualitative analysis of the retail store Metro
Cash and Carry.
The identification of the six thematic reactions demonstrates that in a relatively short
period of time, the initial phases of Covid-19, consumers’ grocery shopping behaviors changed
substantially. Some resulted from external recommendations and restrictions by authorities, but
the attitudinal and emotional drivers underlying consumer behaviors should not be
underestimated. The initial consumer reactions in the Covid-19 crisis are in line with previous
research suggesting that some consumers panic and they tend to overreact, or the reaction is not
consistent with the true level of risk (Amalia & Ionut, 2009; Pennings et al., 2002) . These
types of extreme reactions puts Metro Cash and Carry in stressful situations (Amalia & Ionut,
2009) , which was also evident in this study. Pictures of empty store shelfs and retailers
struggling to refill led to discussions on possible short-term grocery shortage, which may have
fueled even more panic-buying. Media, and today also social media, have a critical role in either
fueling or easing the uncertainty in a crisis. Mass media communications regarding health crises
can have a powerful effect on peoples’ reactions and attitudes according to research (Sato &
Campbell, 2014) . This is an aspect that could be more thoroughly looked into regarding the
Covid-19 crisis, as major shifts in collective behaviors cause unnecessary stress for businesses,
but they may also create new risks in what is already a crisis, such as shortages of protective gear
for frontline health care personnel. Moreover, Metro Cash and Carry ought to thoroughly review
their just-in-time systems and different types of logistics and supply chains to be better prepared
for sudden increases in demand for certain products and services.
 Some consumers seemed to go back to old traditions of cooking and, thus, rediscovering
old familiar tastes. This may express an increased need for safety in a crisis situation, or perhaps
social isolation created an opportunity to engage in cooking together as a fun pastime.
Furthermore, there seemed to be a readiness to try new types of services. This type of behavior
fits quite well with the description of the “concerned consumer” (Amalia & Ionut, 2009) .
These consumers will take a step back in consumption, but at the same time they are the readiest
to try new innovative products. Plausibly the most important development in the initial phase of
the crisis was the shift to online grocery shopping, also among the older population. According
to the articles studied, industry experts do not see us returning to the pre-covid consumer
behavior. In other words, more extensive use of online grocery shopping and new types of
service concepts are here to stay. This may pave the way to a much more fundamental shift in
how we conduct and perceive grocery shopping.
Online grocery shopping has only just begun in a whole new way, and while innovative,
the business in Pakistan is still in its infancy, lacking many features and untapped opportunities.
The retailers who can provide incremental innovative features and a better customer experience
are often the winners in a crisis (Nie et al., 2010) , and being a first-mover seems particularly
important in online grocery business (McKinsey & Co, 2013) . It is possible that those who
responded fast when the crisis started, by offering and extending good online services
(convenience, assortment, experience; McKinsey & Co, 2013 ), have locked in a large group of
loyal repeat customers, in line with Singh and Söderlund (2020) , whose study suggested that
good online experience generates repurchase intentions in grocery shopping. This may prove to
be an important group of customers as they presumably concentrate all, or a large part, of their
grocery purchases to a single retailer. Such increase in the share of wallet, as a result of going
online, was seen in Melis et al. (2016) study of UK clients. We can conclude that while digital
service innovation seems to have been particularly important for grocery retailers and restaurants
to stay afloat during the initial phases of the Covid-19 phases, we may have only seen the
beginning of a much more fundamental change.
How much and how permanently the mindset of the consumer has changed remains to be
seen. Prior studies suggest that grocery shopping is a habitual process, not easily
changed (Hoyer et al., 2013) , and while not yet well understood, this seems to also apply to
online grocery shopping (Melis et al., 2016) . Hence, the crisis may have pushed consumers to
undertake new routines, but the longer the crisis goes on, the more likely it is that they become
accustomed to the new ways of shopping, and the more likely the new routines stick. It is,
however, not accurate to suggest that one habitual process is replaced by another. It is more
reasonable to think of grocery shopping as a group of related behaviors, and while some will
always require deliberation, some can become habitual. Habits stick because they are automatic
behavioral responses to cues in the context, acquired through repetition (Orbell & Verplanken,
2010) , and such responses may trigger other related actions. For instance, if the routine becomes
to order groceries on a particular day, other typical things happening on that day are likely to
prompt the shopping routine. If again a habit develops to add to the online grocery list during the
week, it is possible that the mere presence of a device such as a laptop or tablet on the kitchen
counter triggers this action. This may not alone be enough for the more deliberate online
ordering to take place, but it may be a critical step in the process. There may be many other such
cues, even ones initiated by the retailer, such as a text message reminder, etc.
Another aspect arising from the study relates to consumers’ increased sensitivity towards
the shopping environment. This will most likely have to be taken into consideration considerably
more by retailers also after the Covid-19 crisis, even if restrictions and recommendations
regarding social distancing and hygiene aspects decrease. It should also be noted that there
seemed to be a small group of consumers, who did not substantially change their behavior in
stores. Their behavior was even perceived as reckless by retail employees. This is in line with
previous findings that there is a consumer group that wants to stick to their “usual
behavior” (Amalia & Ionut, 2009) . We are so to speak renegotiating the behavioral norms
relating to grocery shopping but not everyone agrees. This can put Metro Cash and Carry in
stressful situations as employees do not feel safe and other consumers may avoid shopping even
more. The increased sensitivity towards the shopping environment and perceptions of reckless
behavior may indeed require considerations and changes in the setup of future stores and other
types of physical touch points.
METRO Pakistan has also seen extreme competition in online grocery stores from other
large fish retailers, such as Al-Fatah, Carrefour and Imtiaz cash and carry. As a result, the
tremendous strain exerted by rivals and the growing demand for online grocery stores have been
one of the most difficult circumstances since the pandemic. The key cause for this strain was the
prior fashion of physical shopping for shoppers in Pakistan, abruptly replaced by online grocery
stores. Families with children and risk groups have since begun to prefer shopping online.
Families with children and risk groups in particular have preferred online food shopping. In
terms of the older customer plunge into online shopping, the more serious is this behavior, and
the longer the problem goes on. Covid-19 has performed especially as an icebreaker and is
currently jumping for our people to start shopping online.

Conclusion
This study has primarily contributed to previous research on consumer responses
emerging in crises for Metro Cash and Carry (Amalia & Ionut, 2009; Dedeoglu & Ventura,
2017; Duțu, 2020; Kaytaz & Gul, 2014; Nie et al., 2010; Pennings et al., 2002; Sharma &
Sonwalkar, 2013) . The Covid-19 crisis is a relatively new topic, but the crisis has shown
profound impact on the retail industry in its initial phase (Roggeveen & Sethuraman, 2020).
These, changes were formed on both external stimuli, such as restrictions and recommendations
by authorities, and internal stimuli, in the mind of the consumer. The study showed that
consumers expressed some extreme behavior in the initial phases of the Covid-19 crisis, which,
however, subsided relatively fast. Importantly, the study gave clear indications that consumers
started shifting to online grocery shopping, which may induce more enduring changes in a major
retail sector. Furthermore, the study also suggested that consumers’ increased interest in new
types of services is probably here to stay. Hence, further studies could be conducted on the
adoption and use of online grocery shopping and other digital innovations in retail, both from the
consumer as well as from the retailer perspective. Understanding how a major crisis disrupts our
present ways of behaving and conducting business continues to be an important area of study.
The initial crisis seems to have contributed to both consumer innovativeness and readiness to try
out new things, as well as fostered innovativeness among retailers, restaurants and other food
providers, creating new services to cope with the new situation. Crises as fuel for radical
innovations in retail are a topic that should be discussed and researched more.  
Metro Cash and Carry is aware that their responses to the emergency will dramatically
impact their business but are scrambling to adapt as they have very little time to act. For some
major retailers that have already suffered growing competition from online stores, the crisis will
be the last straw and they will either go out of business or permanently close a high proportion of
physical stores, meaning that consumers will be unable to revert to former shopping habits.
Regardless of whether the COVID-19 emergency is harming or helping their profits, retailers
seem to share a common fear of appearing to profit from the pandemic. On one hand, there is the
risk that consumers who felt betrayed by the brands during the emergency will not go back to
buying those brands once the crisis has passed. Indeed, some consumers could be outraged by
some retailers’ opportunism in raising the prices of critical goods such as sanitizers and surgical
masks, possibly leading to grudging resentment even once normality is restored. On the other
hand, consumers who have stopped purchasing the brands during the emergency might be even
more willing to repurchase them once the crisis has passed, if they feel the brands or stores were
empathic and did their part to help.

Recommendations
This case study suggest Metro Cash and Carry that they should focus on the following main
areas to handle the unprecedented demand and pressure brought about by the COVID-19
emergency:

Rethinking agile retailing

New dynamic capabilities need to be developed to deal with consumers’ new demands
and governments’ pressures on how businesses are to be run. A new agile approach would
shorten the lead time between changes in consumer demand and retailers’ responses. In this way,
retailers need to understand how their stakeholders (i.e., consumers, suppliers, employees, etc.)
interact. This would help to reduce response times and simplify processes. More collaboration
with stakeholders is therefore needed (e.g., by soliciting feedback during the operations), to
make them feel part of the process rather than just suppliers or end users. In other words,
retailers need to move away from their traditional plans in order to capture organizational
changes made necessary by the pandemic (e.g., by reallocating employees’ roles). The new agile
approach needs to be implemented quickly so that retailers are ready to deal with the rapid
rebound in consumption after the end of the pandemic whilst adapting in preparation for the
normalization of consumption after the rebound weakens.
A new role for Metro Cash and Carry in society
More than ever, retailers (grocery) will be recognized as playing a fundamental role in
society, and their personnel will be classified as essential workers. Some retailers have moved
their own brand production to medical support equipment and hand sanitizers, or made donations
to hospitals, national health systems, charities, etc. Such practices enhance consumers’
attachments to the retail brand, by perhaps adding a new sense of proximity to the retailer, and
possibly helping to improve the retailer’s image even once normality is restored.
Putting consumers at the core
Metro Cash and Carry has to be aware of consumers’ vulnerability, special needs,
acceptable times for responses, and possible health hazards during (offline) shopping expeditions
and should not underestimate the effect of retail service on consumers’ sense of wellbeing. Metro
Cash and Carry must successfully transfer this awareness into communicating to their consumers
how much they value their satisfaction and wellbeing. Metro Cash and Carry should make it
clear that their priority is ensuring consumers’ safety and health, not profit, while providing the
products they need in a reasonable amount of time. To this end, more personal and sensitive
information about customers might be needed, but consumers might show an unprecedented
willingness to disclose such information in exchange for these benefits. Similarly, consumers are
more willing to wait longer if they are aware that such waiting is related to the enactment of
measures to ensure their safety.
Digital communication
Messages that Metro Cash and Carry spread online during the emergency need to include
information on
(i) the availability of products, specifying any restrictions on the amount allowed to
be bought to limit both speculation and panic-buying,
(ii) their measures to protect consumers and employees,
(iii) their overall contribution to public health, and
(iv) the use of surveillance measures to limit the spread of the virus. To these ends,
retailers need to improve customer relationship management systems, and
enhance safe interactions with customers (e.g., through online chats with
employees) to provide real time customer assistance.
Enacting the suggestions provided in these four points should generate in consumers a
new sense of trust toward the retailers that might well last also once the emergency is over.
Using ML to identify counterintuitive insights
Metro Cash and Carry should provide ML (machine learning) Services which are ready-
made intelligence for the applications and workflows. ML Services easily integrate with
applications to address common use cases such as personalized recommendations, modernizing
your contact center, improving safety and security, and increasing customer engagement. Metro
Cash and Carry should move beyond traditional data analytics to apply ML to get
counterintuitive and previously unseen insights that help them respond to business trends in near
real time during the pandemic. Because many of ML services don’t require any machine learning
experience, retailers are able to immediately train, test, learn, and deploy models quickly and
experiment. An industry that is benefiting from these insights is grocery. At the outset of the
pandemic, grocers nationwide saw product shortages as consumers rushed to stock up on items
like paper towels, toilet paper, and sanitizers. 
Accelerating digital transformation across the entire organization
As stores begin to reopen, shoppers want as many contactless experiences as possible
from contactless mobile payments and cashier-less shopping to safe and easy curb-side pickup.
Buy Online Pickup in Store (BOPIS) is rapidly moving toward a Buy Online, Pickup at Curb
(BOPAC) model. In order for BOPAC to be successful, retailers must remove friction in the
pickup experience. For example, when Prime members in Seattle arrive at an Amazon Fresh
building to pick up their online grocery orders,
Inside stores, retailers are using computer vision technology to better understand store
traffic patterns and redesign store layouts to naturally encourage social distancing. Being able to
identify areas of shopper density enables retailers to redirect traffic patterns to adhere to social
distancing guidelines without having store associates monitor and enforce distancing rules during
their shifts to keep shoppers and associates safe.
Managing in-store inventory in new ways
As curbside pickup becomes an increasingly popular option for shoppers, stores are
becoming micro-fulfillment centers. This creates new challenges and opportunities for Metro
Cash and Carry to adapt stores to help employees become more efficient in these shifting roles,
including facilitating new tech-driven processes for multi-order picking. It’s also critical that
Metro Cash and Carry understand which stores have an item in stock and how many units are
available in each location. When a retailer fails to understand inventory in real time, the
customer experience falls apart, placing customer trust and loyalty in jeopardy. Computer vision
and IoT sensors such as RFID are efficient ways for retailers to track what items are on store
shelves at all times and what needs to be replenished so consumers are never disappointed with
the click-and-collect experience.

Implementation
Reinventing the retail store experience will take time. It will require looking at how
computer vision, robotics, IoT, and other technologies can make stores safer and provide
shoppers with a better experience. Change won’t happen overnight, but it’s necessary for
retailers to protect themselves from future unexpected events and disruptions by creating
efficient ways to experiment and deploy new customer engagement approaches and internal
operations.
The pursuit of ML system for Metro Cash and Carry being able to give shoppers a
seamless and consistent experience across all applications and via all the different devices they
use. That has not changed; it just rules out a few of the in-store interactive options for a time.
With consumers now able to make purchasing decisions at any point along the customer journey,
an ML system remains essential for retailers.
As Metro Cash and Carry proceed through and emerge from COVID-19, technology will
continue to be essential. There is no reason not to pursue the store of the future concept; it will
just have to be done a little differently. Metro Cash and Carry can still use stores to educate
consumers on product offerings, reinforce brand positioning, and support e-commerce sales.
Before COVID-19 closing stores down, research found that opening a new location increases
traffic to the retailer’s website by 37% the following quarter. The COVID-19 pandemic has
underlined the importance of digital and the role technology plays in consumers’ lives as well as
working life. Retailers will need digital more than ever to emerge successfully from this crisis
and thrive.

References

Appendices
What is Metro Cash and Carry doing to keep customers and employees safe?

Answer: We prioritize the safety and health of our employees and have invested millions of
dollars to provide a safe workplace, which is why at the onset of the pandemic we moved quickly
to make more than 150 COVID-19 related process changes– from enhanced cleaning and social
distancing measures to supplying personal protective gear such as masks and gloves. We’ve
implemented temperature checks, disinfectant spraying, and are piloting COVID testing at many
of our sites. Learn more about what we're doing to ensure the safety and support of our
customers, communities, and employees during this difficult time.

Are Metro Cash and Carry Pickup locations available for delivery?

Answer: Yes, we are working with location partners to ensure that where possible Metro Cash
and Carry Hub Locker, Counter, and Locker+ and Apartment Locker locations remain available.
If the Locker, Counter, Locker+ or Apartment Locker location you chose for delivery closes
unexpectedly, you will be notified so that your package can be redirected to a home address or
you can cancel your order for a refund. If your preferred location is temporarily unavailable, you
can search for available locations.