Many hoped the baby formula shortage would have been long over by now. After a difficult spring, caregivers across the U.S. are still without consistent access to formula. The shortage has hurt low-income households and communities of color particularly hard, highlighting yet another worrisome health disparity in the country.
Production is ramping back up, but returning to normal inventory levels will take time. An Information Resources Inc. (IRI) report found that just over 20% of formula products were still out of stock in the month and a half leading up to July 24th. While this represents an improvement over the 40%+ May stockout rate, we have a ways to go, even in early September.
The Abbott plant that is responsible for a large proportion of formula production in the U.S. is finding its footing after shutting down due to severe storms across Michigan. The FDA reports that production levels will need to remain high for six to eight weeks to keep pace with demand. However, there is still no clear end in sight.
For parents, this is obviously concerning. But what many don’t realize is that the shortage is also life-threatening to some adults and older children who depend on formula for various reasons.
For retailers, the timeline ambiguity means more uncertainty and frustrated shoppers. After all, the baby milk formula industry is massive – people buy $4B worth of formula every year. And over half of infants receive formula in some form.
In light of these challenging circumstances, what should retailers be doing? How should they be preparing for an eventual return to the status quo? To answer these questions, we need to take a step back and think about what people value in everyday retail experiences.
What makes a great retail experience?
Before diving into how to respond to the ongoing baby formula crisis, we need to go back to the fundamentals.
- How do people become loyal to a brand?
- What is it that causes them to choose one retailer over another?
When it comes to physical storefronts, geographic location is important, of course. Many people prefer to shop closer to home for the sake of convenience, especially for replenishable household items (e.g., paper towels, toilet paper, light bulbs, etc.).
Others choose retailers for their prices. If shoppers know they can get a specific item for less at a location slightly farther away, they might be willing to make the drive. Bulk retailers, like Costco and Sam’s Club, also offer a way for shoppers to gain access to lower per-unit pricing in exchange for purchasing higher volumes. With a looming recession and rising food prices, these stores have never been more critical to shoppers.
Product selection is another key factor in the shoppers’ decision-making process. People who want a certain product or access to a particular brand are often happy to make a longer trip to fulfill that need.
Finally, the shopping experience still matters. In fact, it can be the differentiator that causes people to establish their loyalty with one retailer over another. People want to feel comfortable and safe when shopping. They want to browse on their own terms, and they want to feel valued.
This is a big reason why online retail has exploded. Online retail, when implemented well, solves pain points across the key success factors listed above – geographic proximity becomes less relevant, selection range skyrockets, pricing flexibility increases, and the shopping experience becomes easier…at least that’s the goal.
With this backdrop in mind, let’s bring this back to the baby formula crisis.
What to do today in response to the baby formula crisis?
We know shoppers are anxious about where and when they can get baby formula. Retailers who can address some of this anxiety will make a tremendous impact in the minds of their customers. So, let’s see what levers retailers can pull according to the factors listed above.
When it comes to physical retail locations, there’s not much to do on the geographic location front. In addition, product selection is subject to production levels by Abbott and others. There’s perhaps some flexibility over pricing, but some retailers may be hesitant to sacrifice margins right now after a tough stretch.
The best option is to refocus on elevating the shopping experience:
- How can you make it more convenient for people to buy baby formula when in stock?
- How can you speed up the checkout process or reduce friction?
- In what ways can you integrate the online and in-person shopping experiences?
- How can you make your eCommerce application even easier to use?
Making a few improvements or investments in these areas will go a long way. And if these improvements can extend or include your baby formula stock when it returns to normal, excellent. Undoubtedly, your ability to distribute formula effectively has the potential to impact lives in an immensely positive way, perhaps even mitigating life-threatening situations.
Now is the time to think ahead to how you can serve caregivers better who are desperate for a specific type of product. The good news is that making it easier to buy baby formula will overflow into other product areas, which will increase brand loyalty dramatically going forward.
