How the Food Industry is Managing with Covid-19

11 September 2020

Shockwaves from the pandemic continue to impact the functioning of each industry and the food and drinks sector is no exception.

Supermarkets have had to devise new and creative strategies to entice apprehensive shoppers back to their stores and put in place high visibility measures which make the experience feel safe, if unrecognisable from how it was before.  Morrisons have introduced separate queuing systems according to small basket, or big trolley, shopping and a Speedy Shopping lane system to admit three small basket shoppers for every big shop trolley customer.  Dedicated Speedy Shopper checkouts have increased speed of payments and Chief Executive, David Potts, commented, ‘It’s fair that customers doing smaller shopping trips should queue for less time too’.

For their part, Aldi has installed an innovative traffic light system to limit the number of in-store shoppers, whereby lights turn from red to green when the next customer can enter, based on the store’s capacity and two-metre social distancing guidelines. Other food retailers continue to explore the optimum technologies to manage the anticipated long term social distancing measures and virtual queuing systems.

Consumer shopping habits were already embracing online before Coronavirus restrictions hit hard. The increase of direct to consumer (D2C) subscription marketing of various bundle offers and complementary products has only consolidated this trend. Before long gifting care packages may also be adapted for birthdays and other celebratory events. All these factors have doubtless been a catalyst for the owners of Lakeside Shopping Centre, in southeast England, going into administration.

The process of making a brand familiar to people is achieved by increasing awareness and engagement through some type of brand experience. Against a backdrop of confused official messaging, it may not be surprising to learn that a recent Zeal survey of 502 shoppers discovered that 53% believed it is easier to get brands to address social problems than the government.

Conversely, awareness of D2C options is comparatively low, with consumers appearing not to realise that they can purchase directly from their favourite brands. Another reason may be that some consumers are opposed to making online transactions for groceries from multiple suppliers. Delivery charges may also be an issue. The costs of the infrastructure involved for delivery to ‘the last mile’ is always costly on account of the necessity for depots, vehicle fleets and wages for delivery drivers.  The online supermarket for small brands, Mighty Small, has devised ‘Working from Home’ snack boxes which can be delivered direct to the door, as well as bespoke bundles for larger groups.

As lockdown took hold and availability of key products diminished, major brands like Heinz, Roberts Bakery, Pukka and Princes had to act swiftly to address the needs of those consumers who were either unwilling or unable, to obtain their shopping in the usual way.  The ‘Heinz to Home’ DTC (Direct to Consumer) operation has been spearheaded by Jean Phillippe Nier, Kraft Heinz’s head of e-commerce, who pointed out: “The idea is not to compete with a retailer. We don’t want to be a retailer. There’s no point launching a DTC business to sell a single bottle of ketchup”.

A recent feature in The Grocer magazine reported that ‘locked-down Brits’ are opting to cook meals from scratch, rather than depend on frozen ready meals for convenience. Iceland’s Trading Director, Andrew Staniland, put this down to people being ‘more time rich than previously’ and preferring to use frozen raw pastry, frozen vegetables, frozen protein and other frozen products to create dishes of personal choice. He commented, “We’re seeing the return of the ‘big shop’ and an end to visiting a range of stores for top-ups’.  This is borne out by statistics showing that supermarket sales of frozen food leapt by £194.8m, a rise of 16.1% in the 12 weeks to 18th April.

As for the UK’s fresh produce industry, at a time when home-grown fruit has never been more important to consumers, growers are in the midst of a profitability and productivity crisis, with labour costs soaring by 34% between 2016 and 2020. The pandemic has led to even bigger  labour costs, due to a reduced number of employees returning to work and businesses having to absorb training costs for new workers, along with extra Covid-19 protective measures.

This does not mean that restaurant experiences are being forgotten on account of Covid-19. It is more a case of creating a ‘big night in’, to simulate the dining out experience as closely as possible. Ice cream desserts are a case in point with Unilever reporting huge sales of Ben & Jerry’s varieties as they team up with Just Eat, Uber Eats and Deliveroo for home deliveries. MD of Just Eats, Andrew Kenny, commented, ‘It’s no surprise that during this unnerving time, people are looking to retain a sense of normality by getting deliveries from their favourite local restaurants and takeaways’.

The Grocer reported in May that whilst New Product Development is back on the agenda, it still needs more support to promote innovation and challenger brands. The article suggests that despite home working and stockpiling necessities,  retailers and suppliers are still intent on continuing with their NPD plans and that supermarkets and food retailers should use ‘gondola ends’ to display new ranges in an eye-catching way.

Despite this unparalleled global health crisis, only a tiny minority of respondents felt brands should stop advertising. However, they did think it essential for media communication to be direct, empathetic and, above all, relevant. Customers’ wellbeing has come sharply into focus as never before and attitudes towards hygiene, safe packaging and handling practices have made an indelible mark on intended purchasing criteria. Morrisons have already decided to trial a paper version of bags for life to replace the plastic ones.

Previous recessions have shown that it can take eight years for ‘out of home’ spend to recover and projected unemployment figures could make this an understatement. Jeremy Garlick of Insight Traction pinpointed three key areas on which FMCG (fast moving consumer goods) companies need to concentrate: revolutionise sanitisation practices, acknowledge changes in consumer behaviour and remember the continuing desire for high quality, healthy and sustainable products.

Going forward Jeremy believes that when companies incorporate these strategies they will continue to flourish despite the unprecedentedly challenging conditions.

For the latest list of KLBD licensed restaurants and cafes for eat out and delivery click here.

 

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