Taking Baby Steps out of Lockdown
I hope you got some quality rest over the bank holiday weekend and filled your tank up for the weeks ahead as the country starts to tiptoe out of lockdown.
Most of you know that I’m a British Cycling and Triathlon coach in my spare time for a couple of local clubs. Well, with no organised sport allowed for the foreseeable future, I’ve got involved a few evenings a week as a volunteer NHS Responder. If you’ve thought doing this, go for it as its good fun, it gets you out and you meet a whole bunch of people you’d never normally meet. See here.
It’s hard to overestimate the battering that the trade has taken over the last two months. Across March we witnessed huge sales spikes which led to variable levels of in-store availability across the multiples. This in turn triggered shoppers to engage in a round of unplanned and unstructured product, brand and even category switching. This rendered supplied forecasts largely irrelevant at times, making it nigh on impossible for manufacturers to make accurate predictions of demand.
Into April and early May, the demand signals stabilised somewhat, enabling managing physical delivery, in store availability and the drivers of demand to all become slightly easier. However, it’s been a hugely testing time especially for those on the factory floor and at home in virtual supply chain teams focusing on forecasting, planning and customer fulfilment. They’ve done an amazing job of riding the supply chain tiger.
You can see some of that play out in the results from our snapshot survey of our HRA Consumer Panel which covers selected shopper hot topics. It’s well worth a nose through the headlines on the findings here.
With the majority of food occasions now at home, it’s not surprising we’ve seen alcohol, ice cream, meat/chicken/eggs and chocolate experience rapid growth. The longer we stay in lockdown the more significant the weekly snacking occasion is – Kantar estimate it is 50% up on pre Covid levels. With at home snacking rising, we are starting to see the more agile impulse led brands deploy social media to switch some of their previous in store occasions to in home ones.
One of the categories that is setting the pulses racing is sparkling tea. It sits at the healthier end of soft drinks and appeals to a younger, educated and more high end shopper. Once dismissed as ‘cold tea in a can’ it’s now carving out a niche as a category to watch. Sophie from the team gives you the low down here.
We’re finalising two long projects at the moment; both are new brand launches in the direct to consumer space. I’m pleased to report that investor appetite is still strong and there is a warm audience out there for attractive consumer propositions.
We’ve seen existing client marketing and brand teams of clients respond to COVID with positivity and ingenuity. We’ve helped them double down on finding out from shoppers how and in what ways their preferences and needs have changed. Once these insights are unearthed and proposition adjustments implemented, this will pay off big time for these brands.
In foodservice, estimates vary but no one thinks that any more than 80% of the trade will come back anytime soon. The forces of competition will have their way. For operators where either the food or the experience wasn’t great, it’s going to be tough. But there is hope.
We’ve been working closely with foodservice operators looking to diversify, wholesalers and also manufacturers who serve the out of home channel. One of our key responses has been to build the HRA Trade Panel. This sits alongside our strong HRA Consumer Panel which we have had in operation for a number of years now. Find out more about our FMCG Expert Panel here, along with how to sign up.
And, we shouldn’t forget that Brexit is still chugging away in the background. Firms that have planned on having a strategy of ‘there will probably be an extension’ look to be vulnerable. Whilst there are arguments for the government to kick the EU Trade deal can down the road, the thinking in Downing Street seems to be to use COVID as a way to concentrate minds on what can be achieved in a deal. It’s therefore prudent to brace for tariffs and friction to some extent.
In all this, my plea for retailers is to develop bigger and better British supply chains. All the majors are looking at building more resilient domestic supply bases – quite right too. If there was less reliance on imported produce, pasta, cheese, meat/fish/poultry then we would have been in a stronger position to weather this crisis. I say that as a critical friend of the trade and also having been a senior buyer for a couple of large retailers. Of course, there are buying imperatives, last year’s numbers to beat, innovation to adopt and exchange rates to surf.
But for the sake of onshoring say 10-20% of the supply base volume into the UK, buyers could ensure that availability is robust when the next periodic crisis or ‘black swan’ event hits. I hope this type of longer-term thinking takes hold over the coming months ahead – it deserves to.
To all of you I’ve Zoom’ed with over the last 7 weeks, I apologise for inflicting my new ‘buzz cut’ on the world. All the boys in the family took the buzz cut plunge early on in lockdown and I have to say it’s a minimalist look that’s growing on me. It was either that route or going for the beard/facial hair route, so I took the road less travelled!
On a serious note, it’s been amazing to see a new spirit of openness, collaboration and looking out for one another develop as the weeks have gone on. I have had so many engaging and genuinely real conversations that have really made me stop and think. Some of the best have been those I have recorded onto the Grocery Insider Podcast, there are some cracking episodes on the wine trade, purpose, the future of agency v client relationships as well as with foodie entrepreneurs. Take a look here.
So for me, my biggest hope in all of this is that we take the new wave of concern for each other, empathy and the sense of humour and tolerance that we have all developed into whatever challenges lie ahead. As we head slowly out of lockdown, let’s not charge straight back to the way we were as an industry. Let’s take stock, reboot and feel our way into a more sustainable (in all senses of the word), compassionate and innovative way of working.