The past year was a challenging one for all businesses and industries, but it was particularly transformative for grocery retailers, who had to adapt to supply chain disruptions, social distancing measures, stock shortages and consumer demand for convenience and immediacy. Many grocery retailers tackled these new challenges by accelerating long-term digital roadmaps and focussing on building strong partnerships with brands and third parties.
It’s clear that innovation was key to not just navigating the climate but thriving in it, and optimism is high as many business leaders see this new normal as a golden age of opportunity. To find out how the pandemic has affected the grocery industry in Europe — and how it’s evolving to face the future — Internet Retailing, in collaboration with Salesforce, surveyed and interviewed leading grocery retailers, FMCG and CP brands across Europe.
The findings have been published in The European Grocery Report, which you can download here.
Forging new partnerships to keep up with emerging trends
The pandemic shed light on the importance of wellness and sustainability, and half of the industry plans to prioritise these concerns in 2021. As shopping behaviour and purchasing patterns changed in the face of COVID-19, grocery retailers delisted products that no longer fit with current wellness trends, while creating their own ranges and channels. They’ve also increasingly partnered with brands to share data, optimise omnichannel journeys and accelerate the product-to-consumer cycle. According to Kantar:
69% of consumers say that they’re supporting local shops
52% pay more attention to the origins of products
The net worth for FMCG of global consumers making eco-friendly choices exceeds $1 trillion.
To better meet the changing needs of their customers, French retailer Carrefour partnered with smaller brands selling healthy and locally sourced products, while Picnic created its own line of organic foods. The landscape is still somewhat unsettled, but grocery retailers and brands are becoming more adept at navigating a world in flux. Richard Martin, Chief Customer Officer, Premier Foods, says, “We feel like we’re getting a better understanding of those variables so we can react fast.”
Focusing on the digital experience
The pandemic saw a massive shift towards digital channels, which presented grocery retailers with an imperative: evolve or get left behind. And while many did just that — online grew across Europe, including by more than 70% in Spain – there’s still some room for improvement. The report reveals that while 70% of grocers in Europe offer an iOS app, just 41% have an Android app. This is especially noteworthy due to the fact that 73% of mobile phones are Android-based.
The shift towards online shopping also presented a wealth of new data, which retailers and brands are leveraging in order to make smarter decisions. The report reveals that 23% of survey respondents say that they’re increasing their focus on personalising experiences through segmentation, promotions and the use of artificial intelligence.
Nearly half of survey respondents plan to make their digital experience a higher priority over the coming year, while 36% say that creating omnichannel experiences that utilise both shops and digital channels will be increasingly important. Some grocery retailers are even doubling as tech companies, offering new, innovative fulfilment options and contact-free experiences that are redefining the shopping journey.
This new, tech-enabled agility is playing no small part in contributing to the overall mood of the industry, which is surprisingly optimistic. Many leaders (84%) expect the sector to see growth in the next year, and 77% expect their business to perform better than the sector as a whole. Additionally -
74% say that the pandemic has made their role more positive and important to their business.
64% say that their performance during the pandemic has helped them leapfrog their competitors.
Grocery retailer Livfs, which launched a number of digital, unstaffed supermarkets in rural areas of Sweden in 2019, found themselves perfectly positioned to lead the way in a low-touch, post-Covid world. Many of Livfs’ technologies promise to be truly disruptive in the new landscape, and the company continues to focus on this innovative spirit.
“In a sense we are a tech company as a core because everything is run by tech and how we operate around big data and the user experience,” says Daniel Lundh, founder and COO of Livfs. “Our system could be applied to any other industry as long as you have a barcode or QR codes.”
Leveraging data and insights to drive loyalty
The digital technologies that are connecting grocery retailers with new consumers are also providing information to better serve them. While unmanned shops, an increased focus on sustainability, and new partnerships with third parties are driving retailers to exciting places, data is the fuel that’s powering them.
The report reveals that 29% of executives say that data has become a higher priority over the next 12 months. This data not only provides the ability to tailor communications and offer better customer experiences, it can be leveraged to create attractive reward programmes that build brand loyalty and increase customer retention.
Many brands experimented with D2C as the pandemic wore on, and for multinationals it was a chance to get closer to their customers. “For the multinationals D2C is definitely not a sales channel compared to the traditional channels,” explains Herve Beck, General Manager, France Benelux & EMEA, Kind. “I view it as a fantastic data collection system where you can get to know your customers better, but it’s not really efficient in terms of sales as you do not have the scale.” That’s not the case for smaller brands, though, as D2C has become an important part of their sales strategies.
What’s next for the grocery industry?
In many ways it’s not surprising that the grocery industry remains optimistic in the wake of massive upheaval. The past year has shown that the industry is not just capable of surviving a storm — it’s capable of harnessing its power and leveraging it for change.
For more insights on the changing landscape of the grocery industry, check out the full report, European Grocery: How the coronavirus pandemic re-shaped an industry.
