Demand for Groceries is through the roof
After years of predictable and quite slowly evolving shopping patterns, current demand means we rapidly need to develop a new understanding of how to best serve shoppers over the coming months, with huge potential implications for Suppliers.
Whether its panic buying or pantry stocking demand is through the roof. UK consumers continue to stockpile goods, decimating the supply chain and fuelling a vicious circle of increased concern and increased demand.
And poor availability means the vulnerable are losing out...
Supermarkets are now looking to cull range
Whilst in the short term this means shorter trading hours, redeployment of cafe & counters staff , and limits to the number of any one item Shoppers can buy, the focus is moving to range and space.
Implications for Suppliers
1. Range Rationalisation
New demand patterns mean every SKU will be questioned. Volume may be concentrated into a smaller number of SKUs, creating a longer tail which could be culled by Retailers to protect on-shelf availability. However, real choice & unique Shopper needs must be protected and smaller brands will be under even more pressure to use consumer, shopper & category insights to really prove the true value they bring to the category.
2. Reduced Promotions
Promotions cause spikes in demand Supply Chain could well currently do without, especially those which only run on shelf with no increased capacity. Added to this, the total amount of secondary feature space may also be reduced causing a double whammy as retailers redeploy some plinth ends to increase shelf capacity for core SKUs, and also look to re-engineer the promotional programme to better reflect current Shopper needs. For example they may feature less packed lunch items and more in home meal solutions, and with reduced opportunity to promote, some brands may want to re-consider their overall pricing strategy.
Major changes always create new opportunities. Some concepts in the NPD pipeline may need to be shelved as no longer appropriate, but new ideas should be explored to take advantage of new shopping & consumption patterns. Which products will increase and which will decline? Clearly some on the go products may suffer mid-term declines, but fresh foods, ready meals & treats may all increase as Shoppers spend more time at home and less in restaurants & food service outlets.
4. Online & Convenience
Increased demand was enough to force Ocado to close their website temporarily this week, and the other Grocers will be feeling the same pressure. Whilst capacity for online deliveries is limited, retailers will do what they can to ramp this up over coming months, driving up channel growth. Increased demand is also sending more shoppers into convenience Stores, and may be sustained as Shoppers working from home do more top up shopping at neighbourhood stores which may be within walking distance. Brands need an effective strategy for both channels to ensure they have the right presence and visibility with the right products to maximise conversion at point of purchase.
Lean in - Buyers are fighting fires day by day at the moment, without time to consider anything strategic or longer term. They will make tough decisions in the interests of their shoppers and their business, potentially also without discussion with Suppliers. Be proactive, and be understanding. Think 1, 2, 3 months down the line to help them. What does your future demand curve look like? What can you share about new shopping patterns and consumer needs in your category which will help retailers adjust their offer?
The market is evolving quickly, and we are operating in a very different world to just 4 weeks ago. Timely insights & rapid learning about how the coronavirus outbreak has changed consumer & shopper needs in your category, and what this means for future category and brand strategies are crucial to driving growth over the next few months. Suppliers who can help Supermarkets develop this new understanding will be the ones to win.
Thank you for reading this article. If you need any help understanding how recent changes in shopper behaviour are impacting your brand, and what you need to do about it to thrive and grow then please get in touch for a free initial chat.
Optima Retail is an agile, independent insights & category management consultancy working with scaling and established businesses to accelerate category and brand growth.