We know there was change everywhere in 2020. Forces beyond our control changed how we live and work. One place that change was obvious was in grocery stores. For years retailers had been trying to create and operate stores where consumers could explore, be inspired and find the food for their family. It changed last year to be a controlled experience where many consumers were just trying to get what they wanted and out the door as fast as possible. There were few businesses that did not have to change. Food producers and processors had to adapt and change so much. It is important to think about the customer as well as you make plans for 2021.
Obviously, the priority was to create a shopping environment that was safe for customers and employees. This included limiting the flow of traffic to one direction in aisles, plexiglass at checkouts, 2M distance between customers and employees in service departments, managing line ups at the entry and many other changes. The change retailers had to implement at store level was huge. As someone who worked in retail for a long time, the change they orchestrated was quite amazing. We do need to think about the changes beyond retail as well.
We notice the physical changes to the store but there is more to it. The entire labour model changed for them. They now have to schedule employees to monitor line ups at the front door where capacity is limited and they have significantly more cleaning to conduct. Employees cannot work in the same proximity as they used to and it is less efficient to operate a store when you can only go down the aisle in one direction. Another complexity retailers have endured is the different regulations from one province to another. Our large Canadian retailers are structured to manage centrally and strive for consistent execution of programs. They had to adapt to 10 provinces and 3 territories with their own perspective on how to handle a challenging situation.
Keeping the stores stocked with the right amount of product has been very important. Consumers are selecting the store to shop at based on their confidence they will have everything they need.
In Canada we were behind many other markets for ecommerce in food and beverage. There are reasons for this but they are irrelevant now because retailers had to respond. Consumers wanted to shop online and they have certainly taken advantage of it. We estimate online purchases of food and beverage have increased from 2-5% prior to the pandemic to 12-15% now. Retailers had to very quickly improve their online platforms to handle the increased volume. They had to find people to select orders and they had to train them to select the right items at the right time. Sobeys accelerated their construction on the dedicated warehouse with robot order selecting and delivery (by people). Now retailers need to get a return on their investment.
As organizations they also had to figure out how their employees could work remotely. Many of them are still working from home. They do have sophisticated systems but they were built to work together. Many businesses have faced these challenges.
One of the biggest priorities for retailers was to figure out how to handle the increased volume. No doubt they want sales and we always would have said it was their number 1 priority. 2020 was an example of careful what you wish for. On one webinar I heard a person from Nielsen say retailers were doing Christmas week volume every week. That is a huge windfall but also a huge challenge. It is one thing to get ramped up for holiday sales. It is another thing to di it every week. Everyone expects them to be making a lot more profits at these volumes. We have not seen that yet and the pressure will mount.
All good suppliers focus on the priorities of their customers. These priorities have changed a lot in a short period of time. Consider how your business is focused on these priorities and make sure you mention them in your (virtual) meetings with retailers.
At the end of the month I will continue west to B.C. where I am speaking at the Pacific Ag Show. I had the opportunity to be in Abbotsford a few years back and this is a great show. We have two sessions planned, one for greenhouse growers and one in the direct marketing segment. Lots of interesting insights to share for these two audiences to help producers and processors make the most of 2021.
At the beginning of February I will be presenting as part of the “Preparing for Retail Success” webinar series, join Perennia Food Scientist Emily Page and I as we talk about “Three Steps to a Successful Online Food Business.”
If you have any questions about how to get your local products on the shelf or in the shopping cart you can always call me at (902) 489-2900 or send me an email peter@skufood.com.
Peter