The impacts of the COVID‐19 outbreak on the food retailing sector in Canada are significant and, to a great extent, unexpected. The impacts fall into two major categories, the first being the actual impacts of public health on individuals, on employees in retail and food service, and on individuals throughout the rest of the supply chain, and the second being the dramatic change in what and where people want to buy their food. Although there is an immediacy to the impacts of COVID‐19 on the food retail and food service industries, there is a remarkably uncertain projection for the future in a world where the SARS‐CoV‐2 virus is manageable and we go back to “normal” life. The new “normal” is unlikely to be the same for the retail/food service level of food markets as life was in January 2020.
In Canada, for example, over the period 1997–2017, household expenditure share on food away from home increased from 20% to 30%.1 Revenues generated by different industrial categories of retail trade and food service (Figure 1) illustrate the significant increase in revenues in food service and drinking places (deflated 2002 dollars), whereas food and beverage stores, convenience stores, and beer, wine, and liquor store revenues remain relatively flat across the period from 2004 to 2020. Both food retail and food service sectors are significant in terms of employment within Canada. As seen from data in Figure 2, the share of employees in food retail declined from a peak of 3.7% of 14.6 million employees in 2009 to 3% of 17 million employees in 2019. The share of food service employees, on the other hand, increased from 6% of total employees in 2010 to 6.7%, on average, over the period 2017–2019.
Brown (2018) reported that, as of April 2018, 28% of 1,000 Canadian respondents had shopped for groceries online (with 6% regularly). These numbers were up from 15% of survey respondents from 18 months earlier. In 2018, Statistics Canada reported an increase in food service and drinking places that report e‐commerce sales from 7.3% of businesses in 2016 to 22.9%.2
Although Canadians had awareness of the SARS‐CoV‐2 virus elsewhere in the world, the first report of a presumptive case of COVID‐19 in Canada occurred on January 25, 2020, in Toronto. The virus began to get more serious attention from the public as states of public emergency were declared by individual provinces (March 13–27). With the shutdown of schools and eventually other nonessential services, heightened concerns were felt throughout the country.
The recommendations/orders to stay home immediately changed the way individuals looked at food purchases. First of all, everyone (both children and adults) became housebound (with the exception of essential workers). Second, people realized that they personally were vulnerable, to disease and to loss of employment, and that food habits needed to change—for example, eating three meals a day at home, changing the frequency of “shopping” trips, and being faced with the unavailability of certain places where they had traditionally shopped. At terrific speed, the following changes were felt in the food retail and food service system:
The shutdown of sit‐down restaurant dining switched food purchases to grocery stores. This significantly changed the volume and types of foods purchased at grocery stores without the stores having time to adjust their supply chains. In some notable cases, the shopping behavior resulted in shortages of products in grocery stores (e.g., toilet paper), which exacerbated people's concerns and may have increased stockpiling behavior.
Actions taken by food service, food retail, and government in response to the declaration of public emergency status and the changes in consumer behavior that ensued included the following:
It is difficult to predict exactly what might happen in the food service and food retail sectors as Canada recovers from the economic and public health effects of this COVID‐19 outbreak. Once states of emergency are lifted, then food service will likely reopen, and the question of how long it might take for people to be comfortable eating in restaurants again remains open.
Income elasticities of demand for food‐away‐from‐home purchases are considered to be more elastic than similar elasticities for food‐at‐home purchases. From Table 1, the potential impact of the COVID‐19 outbreak on potential food expenditures in total and by segment can be illustrated. A base of the 2017 food expenditure levels is used to translate percentage expenditures into 2017 dollars. An assumption of a 7% impact on disposable income in 2020 and a 3% impact on disposable income in 2021 is used as the shock to the system.
|Income expectations||Food expenditures||Share of expenditure on food‐away‐from‐home||Share of expenditure on food at home|
|Estimated income elasticities of demand 1997—2017||0.17||1.36||−0.41|
|In 2017 billion dollars|
The above numbers assume that restaurants are allowed to open again in 2020 and that the income effects are distributed across the 2 years rather than being captured in one or two quarters of 2020. The results highlight the shift between food away from home and food at home (even in the absence of restaurant closures) arising from the oppositely signed income elasticities.
Food retailing and food service sectors are both important economically in Canada. Prior to the COVID‐19 crisis, the food retailing sector has been evolving to higher sales through supermarkets and convenience stores, and the food service sector has been growing considerably, taking food market share away from food retailing. Actions taken under the states of emergency imposed to deal with the pandemic in Canada have changed the reality of food purchasing and the confidence people have in the ability of the food retail system to maintain consistent food and grocery availability. Some reactions by the public, such as increased online purchasing with grocery delivery, will likely be maintained after the pandemic restrictions are over. There are uncertainties about how the public will react after states of emergency are lifted in terms of restaurant visits and the types of foods that will be purchased through food retail.