Focus on Grocery: What Happens Next?

With the help of Ben Miller – Insight Services and Events Director at IGD – we attempt to gaze into our crystal ball and answer the question on everyone’s lips:

What will the world look like post-pandemic?

IGD is a research organisation, specialising in food and grocery. As part of Retail Expo 2020, Ben gave us his 10 hypotheses of what the new normal will look like.

First, let’s consider societal changes in the short and long term.

1. Reversal of globalisation

The corona virus has exposed the vulnerability of some supply chains and we have seem governments step in to limit exports in some cases. Even once the virus has passed we will likely see a trend towards the re-shoring of production and potentially government mandates securing supply of essential products.

2. More frequent business disruption

Even once the lockdown has lifted, there will be a risk of further outbreaks or waves of the corona virus, not to mention the possibility of other illnesses. The UK food industry is famously lean, using just-in-time logistics, so we will see a larger buffer put in place for key products. In the longer term we will see the overhaul of incident management and crisis resolution, with the integration of risk-focused KPIs and enhanced automation to manage future incidents.

3. Kinder and more community engaged society

Contrary to Hollywood disaster movies we have actually seen society come together and care for each other, not descend into chaos. From this we expect to see key community issues move up the national agenda such as the eradication of food poverty and conscious consumerism. We will community stores becoming a reality.

Next, we will look at the change in shoppers.

4. Revert to savvy shopping behaviours

When the economy contracts we generally see consumers focus on value and price of products. At the moment shoppers’ choice of store is driven by convenience and ease, but as restrictions lift we will see this shift to be driven by a desire to save money. We will see a rise in savvy shopping tactics as financial confidence declines.

5. Eating at home is the new eating out

Of course right now we have no other option but to eat at home. We have seen food-to-go innovation slump as grocery brands focus on delivery services. Social distancing is likely to continue to some extent for the foreseeable future, so expect creative ways on how customers can make eating at home more a more social experience.

6. Seeking our creative and social experiences

There is a pent up demand for socialising and creative activities. For some people this will continue to be virtual for some time due to health risks, but anything that helps people come together in a safe way will be positively received by the public. Grocery businesses should consider how they can weave this pent up demand into their loyalty campaigns.

Finally, we will consider the changes in the retail industry as a whole.

7. Increasing market consolidation

In the long term we could see the big getting bigger, with smaller businesses leaving the grocery market. There will always be some place for smaller and more agile businesses but we may see a lowering of barriers to mergers and acquisitions.

8. Prioritising operational efficiency

Although supermarkets have seen record sales, they have also seen profit margins squeezed as costs have increased. This will lead to a long term shift to be as efficient as possible. We will see increased automation for inventory management, pricing and cleaning. The roll-out of digital technologies will increase but fewer new store builds/remodels and less focus on high-cost experiential services.

Digital signage and electronic shelf labels will be an important piece of this puzzle, allowing stores to automate pricing and promotions from a central control point.

9. Agile and flexible store formats

The industry has taken valuable learnings from how stores have adapted to cope with the corona virus. In future we will see a greater focus on format flexibility to protect staff/customers and to cope with disruptions.

Again, digital signage will play a key role in pushing critical information to both staff and customers in-store, as well as enabling formats to change quickly by changing signage.

10. Elevated online grocery penetration

According to IGD’s own research, 13% of the entire UK population have tried to buy groceries online for the first time in the last 4 weeks. This increases to 20% for the over 65s. For many this is a loss-making model and retailers will need to focus on the profitability and scalability of this. The UK may follow in the USA’s path in utilising the gig economy to pick and deliver groceries to customers.

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