What we think

These last few weeks have been a rollercoaster for all of us, resulting in huge changes to the way we live and shop. It’s inevitable the retail sector would feel the impact of our shift in habits and the domestic headlines over the last fortnight have been dominated by the supermarkets and their reactions to consumer demand.

In this article we take a look at the exceptional developments in the most competitive section of the Retail sector; the supermarkets.

Supply and demand

Supermarkets are an essential part of everyday life in the UK and are woven into the fabric of British life. They often act as a barometer of the national mood; highlighting ‘bad’ behaviour at certain times of the year – see annual headlines about Black Friday fights over TVs and the 6am Christmas queues. It seems in challenging times they reflect how madly and badly we can behave and the beginning of this situation was no different with ‘stockpiling’ highlighted across the nation with photos of empty shelves across the media.

Digging a bit further into the data however, reveals a slightly different picture. Kantar data reveals the ‘stockpiling’ reports were actually driven by the majority of consumers topping up their shop rather than buying trollies full of things they don’t usually buy. Only 3% of dry pasta shoppers bought extraordinary quantities; the other 97% of dry pasta shoppers were buying an extra pack or two anticipating spending more time at home. The news reports crying scarcity then drove shoppers back into store to do the rest.

Following the application of social distancing to supermarket shopping, retailers are now seeing demand level out slightly and stock levels begin to return to more a more manageable situation.

Competition

Retail is a highly competitive space and supermarkets are often referred to as the ‘heartland’ of retail, such is the pace of innovation and change driven by competition. So it is exceptional that last week saw amendments put forward for a temporary and specific change to the Competition Act of 1998 relaxing rules on data sharing regarding stock levels, opening times, distribution, delivery and staff.

“This is a short-term measure, in the spirit of working together” comments Andrew Opie, director of food & sustainability at the British Retail Consortium in The Grocer last week.

It’s an unprecedented move that completely changes the everyday function and focus of our big retailers. Change and innovation in retail is usually driven by competition, but in these times of national emergency necessity becomes the driver for change and the supermarkets are now working together for one aim of literally ‘feeding the nation’. It shows the enormity of the situation we are in when a phrase that is normally used as a marketing strapline becomes the simple truth.

Online

In the past few years, only 7% of grocery sales were attributed to online according to Mintel, and this had actually levelled out and appeared to be decreasing slightly. Following direct advice from the government to ‘use food delivery services where you can’, the massive spike in eCommerce traffic has seen all the major supermarkets’ websites and apps temporarily shut down or closed for maintenance and development after they experienced a massive increase of traffic (they’ve all since re-launched).

Supermarkets are even discussing sharing vehicles for home deliveries, to optimise capacity, so we may soon see Asda vans delivering Morrisons’ products; an unthinkable scenario in normal times and a logistical mountain to climb but one that is now a possibility thanks to this pandemic and the need for people to stay at home for the foreseeable.

Foodservice

The closure of the hospitality sector has forced restaurants and their suppliers to look for new ways to move stocks of food to people in need. There have been great stories of innovation and development from Leon, Bidfood, Brakes and Deliveroo who are all finding new ways to feed people who are unable to get to the shops. It’s a staggering turnaround for a sector that could have been very soon decimated by this situation, and retailers who found themselves with huge amounts of food going to waste.

There is plenty more to say around Supply Chain and the reactions of individual brands and categories to current events but we’ll leave that for another article! We hope our retail network is staying safe and sane in these times.

Image via Unsplash.com