The future of food retail - what about the little guys?

Profile picture for user gonzodaddy By Den Howlett February 12, 2021
Summary:
Subtle changes in the UK retail food market have arisen during the pandemic. Are those changes here to stay and if so then what are the characteristics defining this change? Hint: technology helps.

Image of a cow
(via Pixabay)

Stuart has been following the online retail story for years, and understandably, his content focuses on the major brands. Yesterday, for example, he talked extensively about Ocado's plans to capitalize on the latest changes in customer behaviors. This is all good, but as I, along with millions of others, adjusted to a near-permanent lockdown, our buying habits didn't just switch to online. They switched to selective online. What do I mean?

Retail is at the end of what are often long supply chains, whether that's tomatoes in winter coming from Spain or my cod dinner coming from a fishing fleet in the Atlantic. Many growers or harvesters are catering to the retail trade as we normally understand the term and hospitality. We all know that industry is close to extinction, but that still means producers must find new markets. Where else than retail? But how and what selection should they offer? Is it even worth it?

If my anecdotal experience is anything to go by, then I've seen three trends:

  • People being much more willing to buy locally, even if that means the apparent economics are unfavorable compared to visiting the big brand supermarket or getting a delivery through an online store.
  • The expansion into end-customer markets by producers and wholesalers who can offer the variety that sometimes eludes the customer in the ordinary course of in-person shopping.
  • Clear differentiation in terms of service and quality between those new market entrants and the more established retailers.

I don't know how others think, but the way I look at local versus national is through the cost accountant's lens. To get to a supermarket, I have to take a bus, drive a car, park it up, maybe pay a parking fee, and spend time running around a store, all before I make any selection. That's time and money. Online, I can browse or search and assemble an order relatively quickly. But then, as Stuart discovered, I've now got to wait in line for a delivery slot and, at the same time, hope that the supermarket/provider doesn't foist too many unwelcome substitutions onto my final delivery. 

The local providers, on the other hand, are much savvier. They often assemble boxes of commonly bought items (especially in fresh fruit and vegetables) but in quantities that ensure they run stock down to zero within timelines that allow them to deliver as close to fresh as possible. The packaging is often minimal or sometimes non-existent. The example I remember is unwashed potatoes, and there's something reassuring about that. At first, I saw these providers - often farm outlets - feeling their way into the market with limited but good enough offerings that were reasonable value for money. Today, I see those same producers providing a wide variety of fresh produce with a smattering of specialist canned and bottled goods thrown in. You don't do that if the idea falls flat. 

A more recent example is that of the wholesaler of hospitality provider offering goods to the end consumer. Here, the variety of goods available is a foodie's dream. Products that are often hard to find are routinely made available. These providers operate on a seasonal basis wherever possible because this allows the best quality products at the best prices—no December strawberries from them. The downside is that available pack quantities are often much larger than you'd find in a supermarket. This can be overcome by sharing among families, something we've done with success. 

Common in all of this is the commitment to quality produce and service delivery unmatched by the national competitors. On occasion, I have used Ocado, Morrisons, Tesco, and Sainsbury. I've found that the vegetables, in particular, are often short-dated and of lesser quality than I'd expect to see in the store. On the other hand, the produce I get from the new entrants is much fresher and lasts considerably longer than that bought from the supermarket outlets. In meat and fish, I see the emergence of providers who are touting quality first and price second. 

It has long been argued that food prices in the UK are artificially low, reflected in the quality. The alternative producers are not playing that game. One example I like to quote is that of the company that sells you a piece of a named, traceable animal. You have to wait until all the 'pieces' are sold before the animal is taken for slaughter and the meat aged. Convenient? Not so much, but then a little planning irons out the delivery wrinkles. This service is not so much more than I'd expect to pay for the equivalent cuts of meat at a supermarket or from a local butcher, but the quality difference is significant. Elsewhere I see specialist meat providers offering the kinds of food that need not just be for a special occasion but which expand our diet. 

None of this would be possible without technology, which is now widely available to all makers and creators at a reasonable cost. 

You might be reading this and thinking - ah yes, but you're a foodie, and so it only applies to you; the world and his dog will still use the big brand supermarkets whether online or in-person. Perhaps. But then I look at the extent to which the services I am using, many of which were barely visible a year ago but which today is clearly thriving, and I have to wonder whether what I'm seeing represents a revival of quality over price. That might seem counterintuitive during a pandemic that has shocked the nation, and only time will tell if we are witnessing something of a change in the shape of food markets. Whichever way this shakes out, I'd like to think the online 'farmers market' is here to stay.