Price hikes to technology: Covid’s effects on consumer commerce are here to stay

CLEVELAND, Ohio – The coronavirus pandemic started, and continued, as a medical story, affecting all corners of the world. But it didn’t take long for its ramifications to cross into consumer commerce, creating a series of reactions in our lives – from how we shop, buy, dine out and watch entertainment.

We’re still feeling that impact.

The pandemic brought an increased awareness to germs – specifically how fast they spread in confined places like planes, veritable flying petri dishes.

Behind the scenes, businesses scrambled to adapt. Many of the changes they have kept, including an emphasis on cleanliness, a reliance on technology and an insatiable demand for customer convenience.

This is one in a series of stories by cleveland.com and The Plain Dealer exploring lasting changes from the COVID-19 pandemic with the end of the federal COVID-19 declaration on Thursday, May 11. Read related stories at this link.

The pandemic led to supply-chain issues, and resulting price increases are still forcing restaurant owners to question how much they can charge for certain items.

Chris Hodgson of Driftwood Restaurants and Catering keeps an eye on the bottom line – a never-ending cause of frustration.

“Education is still the hardest thing within our industry,” he said. “I think groceries went up 11% or 12% for people last year, but they don’t recognize that, and that doesn’t translate to the restaurant for them. You know, your brain still tells you a burger’s 12 bucks.”

But behind the scenes, away from the bar stools and tables, Hodgson sees this: Beef went up 5%. Dairy products soared with double-digit increases. Bulk purchase of fryer oil – what few diners would think of as they munch on a sandwich and fries – used to cost $50; now it’s $120, he said.

“Those prices aren’t coming down to us,” Hodgson said. “I mean, if I’m a fryer-oil producer and I’m charging you 120 bucks, and you’re paying it and everyone else is paying it, I’m not going to lower my price to $90.”

He added: “No one’s going to take the steps backwards, whether it’s the cattle rancher or anything else. Once you get the price, you set the price, and now people are paying. And until the demand stops, (they) don’t have to change the price of any of the products.”

Texas-based retail expert Rich Hollander is a managing partner in Axcelora, a business matchmaker firm that connects representatives between companies. He makes a living studying retail trends, consumer habits and challenges like supply-chain issues.

“With chips, (automakers) couldn’t build cars,” he said. “There was all kinds of pent-up demand. You saw used cars go way up.”

And consumers also have decided to live longer with certain goods, he said.

“Consumers have said, ‘I’ll put things off.’ Can I live with that cell phone another six months or another year as opposed to buying a new one every two years just out of habit? They did the same thing with cars – ‘I’m not driving that much because I am not going to the office every day.’ “

Many people stopped driving to work, but store shopping remained.

Before Covid, the supermarket experience was pretty much what it had been for decades: Go to the store, buy what you want, leave. Giant Eagle already had been experimenting with curbside pickup.

Covid, said Giant Eagle spokesperson Jannah Jablonski, “really fast-tracked” customers’ interest in the service.

“We were ready to respond and grow at a substantial rate,” she said, “and we’ve continued to do so.”

The “online element to grocery shopping is here to stay, whether that is online ordering for pickup at your local store or for home delivery. We have just seen the interest that was sparked by Covid really take hold, and now it’s become part of the routine for a lot of our customers.”

And that’s the payoff for the Pittsburgh-based company with scores of stores throughout Northeast Ohio. It was a classic case of the cliché, “If you build it, they will come.” In this case, it’s more, “If you offer it, customers will embrace it.”

Jablonski said more than 30 stores were remodeled for user experience. Ordering sections were added along with coolers, freezers and other areas, based on demand. Now, Giant Eagle has curbside pickup/delivery in 103 of their supermarkets – about half of their locations. And the company had to implement it in a sustainable way.

“In the peak of the pandemic, the demand for these curbside pickup slots and home-delivery slots was so high, if we put everything in to meet that peak demand where would we be when that leveled out?”

Some stores embraced the pickup-ordering concept, said Hollander, who said he recently had lunch at a place where he saw 20 people waiting to pick up orders with only four people dining.

“Go to Chipotle,” he said. “Forty percent of Chipotle’s restaurant business is pickup. They’re actually changing the design of their stores. You don’t need as big a seating area if 40 percent of your business is going out the door.”

Target, he said, is a good example of a company using pickup deftly.

“It’s nothing for them to do two or three hundred pickups a day. Target’s really good at it,” he said.

It comes down to handling business practices spawned because of Covid.

“We have seen so many changes throughout the pandemic,” Jablonski said. “At first we saw panic buying. That put our logistic teams to the test to figure out how to get increased inventory to store as fast as possible.”

Jablonski also sees feedback from customers about their in-store experience. That means high levels of sanitization helps people “feel good about shopping in our stores when they were hesitant to go to a lot of places outside their homes.” Those hand-sanitization sprays and wipes remain as common in stores as salt and pepper shakers in restaurants.

Stores like Giant Eagle also had to balance a relationship with state health authorities when it came to issuing vaccines via pharmacies.

“We’re excited to be on the other side of that,” she said, “but who knows what the future holds?”

When it comes to technology, the future is here.

That’s felt by the millions who cross the turnstiles at Cleveland stadiums and arenas. With Covid, cashless options became a way to avoid contact. Now it’s common to go into Rocket Mortgage FieldHouse and never touch a dollar bill. Cash is not king anymore.

“I don’t think you’ll see it coming back,” Hodgson said.

Aramark General Manager Adam Zann said the roots for cashless operations date back more than 10 years with mobile ordering – “ways to not stand in line,” he said.

“That part never really took off, at least not in venues,” Zann said, adding it found its groove for residential and office use with delivery services like Uber Eats. “But the two- to three-hour venue experience just never really translated to it. As Covid came along, we started to do our re-openings. If we’re trying to be as clean and sanitary as possible, let’s talk about cash because obviously it’s one of the dirtiest things out there.”

Then, he said, self-checkout technology began to improve.

Mashgin might have been a foreign concept to many consumers just a few years ago, but now it has become de rigueur to walk into a kiosk, grab a drink, place it on the scanner, punch in your credit card and out you go – back to your seat.

Zann said self-checkout at grocery stores led to “a more natural adoption for our consumer as well. When you come to games you say, ‘Oh, I know how to do this, I do this all the time at the grocery store.’ “

Self-checkout – not self-ordering – “really moved the needle for us.”

It also translates financially: A Symon’s Burger Joint in the arena was converted from self-order to self-checkout, Zann said. Result: Sales have almost doubled. Same menu, same number of workers.

“We just flipped how that stand ran,” he said.

The consumer impact also has a financial component: People pay a lot of money for tickets, so if you want to watch a game, the contactless approach gets you back to your seat faster. Who wants to be in line when Donovan Mitchell starts shooting the lights out?

Zann cites the Intuit Dome, the planned home for the Los Angeles Clippers, as an example of a “completely seamless, frictionless experience where you don’t really interact with people. … It’s not even self-checkout; it’s Amazon Go, it’s Amazon Just Walk Out technology (using) facial recognition and camera technology to capture what people are taking.”

He admits that’s a bit of a “pipe dream” but adds, “It’s hard to say where it’s going to go because it’s come so far just in the last three, four years.”

Hodgson also sees a financial savings from a cashless approach. He said a business going cashless results in less theft. The need for cash-based businesses to hire auditors – which can cost upwards of $90,000 annually – diminishes. And any nervous reliance on a young employee to carry night deposits to a drop box goes away.

Cash is being relegated to an “old-school mentality in restaurants,” he said.

Other technological effects include the proliferation of QR codes in restaurants, where diners don’t get a physical menu; they scan the business’s black and white, maze-like code and have the menu pop up on their phone. It’s an alternative to handling grimy menus.

When a server does saunter by, consumers still expect good service, Hodgson said. Meanwhile, as the pandemic tore through the restaurant industry, workers left the business. Salaries went up for those willing to be a dishwasher, cook – whatever a restaurant needed.

“Prior to the pandemic cooks cooked for 12 bucks an hour,” he said. “After the pandemic, cooks are cooking for 33% more. And the consumer just doesn’t understand that.

“And it’s a very hard thing because it came so fast.”

I am on cleveland.com’s life and culture team and cover food, beer, wine and sports-related topics. If you want to see my stories, here’s a directory on cleveland.com. Bill Wills of WTAM-1100 and I talk food and drink usually at 8:20 a.m. Thursday morning. Twitter: @mbona30.

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