In the past when we talked about where people buy food and beverage it was a conversation about:
Retail vs. food service
Traditional grocery vs. discount vs. large store vs. mass vs. club vs. specialty
Wholesaler vs. selling direct
In 2020 an entire new channel emerged as a viable option for food and beverage in Canada which is online or e-commerce. There were certainly examples where consumers were buying online but in the last 12 months this has increased to a channel that needs to be considered.
With more consumers online because they are limited in what they can do, they are more willing to shop for groceries and other food and beverage online. Retailers have also improved their online offerings and we even have third party shopping like Instacart now in some cities. We also have producers and processors selling direct to consumers online and there is the marketplace option called Amazon too.
When we ask the question, where do people buy your products? We have to consider all of the previous options and add online to the list of options.
When we look at the C.A.R.T. process it is definitely relevant to ask this question because so much has changed in the last 12 months.
There are a number of changes to the market to consider when you ask the question about where people buy your products.
- We have experienced significant shifts from food service to retail. Canada was probably close to 70/30 retail to food service and since the pandemic started this has changed to 85/15. Certainly, some food service will come back as people are out more but it will be a long time before we get to pre pandemic levels.
- Within retail consumers are shopping at stores closer to home and avoiding some of the large regional shopping destinations
- Consumers are shopping stores with solid in stock positions because they do not want to be forced into stopping at 2-3 stores to get what they want.
- The increase in online shopping for food and beverage has impacted many categories. The penetration for online was +/- 3% prior to the pandemic but has increased to 12-15%. Similar to restaurants some of this will change as people are out more but e-commerce is definitely a channel to consider.
Assuming you sell your products to retailers, distributors and/or wholesalers, their performance will have a direct impact on your results. If your products are going into segments of the market experiencing growth it will be positive. If your customers are struggling you will need to find new markets to maintain your sales and grow your business.
You do want to think about where you are selling your products and any shelf is not the right shelf. Consider the changes in the market and focus your efforts where you will get the best return. You also want to consider the answers to the other questions in our C.A.R.T. process such as who are your customers because that will also help you figure out where they will buy.
Code of Conduct
This week Sobeys and Food, Health and Consumer Products Canada (FHCPC) announced they had agreed on a code of conduct for the food industry. We know there has been a lot of conversation in the industry about this subject, precipitated by some incremental fees announced by retailers and a number of other issues that have strained the relationship between buyers and sellers.
It is interesting to see these two organizations announce something without the buy-in from the rest of the industry. If we assign Sobeys a 25% market share and estimate the members of FHCPC are 50% of Sobeys sales, it really impacts 12.5% of the industry. Perhaps other retailers and suppliers will adopt this as well?
The other question we have to ask is what will change? There is a mechanism to bring issues forward but it will be interesting to see if it is used and how effective it is.
We will watch this closely over the coming weeks.
Loblaw local program
Last week Loblaw opened their first new store in Atlantic Canada in a number of years. The store is a smaller footprint than previous models with new fixtures in a number of fresh departments.
One feature of the new store and the existing Bedford location was the launch of a new local products program. A number of racks are positioned throughout the store featuring local products. No doubt a response from Loblaw to consumer’s demands for more local items. The initial launch will be shelf stable products and you can expect to see this in other Atlantic Superstores and some franchised stores this spring. A similar program is in other regions as well.
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 email@example.com.