Assessment of the Impact of COVID-19 on Grocery Retail in Ukraine

The coronavirus crisis affected the development of the global financial system: for some industries, the impact was extremely negative, reducing the market value of specific companies by more than 50%. However, the effect of the crisis on non- cyclical industries such as retail is not easy to assess. The resilience of companies strongly depends on the flexibility and multi-format qualities of the business model and the ability to innovate. For specific market players, the crisis period has become a window of opportunity to increase market share. For grocery retail in Ukraine, enormous challenges driven by COVID-19 influenced the acceleration of the transition from traditional sales channels to online shopping and led to an unexpected sharp growth of convenience and hard-discount store sectors. Consumers had to learn to live with the new reality that changed their shopping behaviors; a large proportion of them started to shop for groceries via online channels that they had never used before. A significant number of consumers are going to stick to online channels even after the reopening of brick-and-mortar stores. The objective of this research was to explore how COVID-19 affected the dynamics of the grocery retail market using economic-mathematical modeling. In employing Machine Learning methods, the authors offered an approach to assess the effects of the restrictions that the Ukrainian government imposed to localize the spread of COVID-19. The effects on consumer behavior metrics were modeled and interpreted according to local retailers' business models, the location qualities of brickand-mortar stores, and potential shifts towards digital sales channels in specific regions.