It’s no secret that 2020 has been wrought with unpredictable changes. Here are a few big changes we’ve seen this year:
- Increased sales have been with lower margin items, instead of higher margin items like sandwiches.
- Retailers and e-commerce food stores have hired temporary staff to cope with new, in-store demand and to deliver groceries to our doorsteps.
- Lots of retailers have invested in higher cost e-commerce sales to increase profits.
- Beef demand hit a low point this spring, but retailers offered a plethora of discounts to keep consumers interested. For example, promotions on steak cuts encouraged consumers to get creative with BBQs during this year’s heatwave.
- Butchers, farms and the food service sector pivoted and adapted their businesses to direct to consumer retail service by packaging their own products.
- And.... supermarkets report the sales of alcohol went through the roof!
But the question is what these changes will mean for the future of supermarket shopping.
The era of e-commerce?
Unsurprisingly, the pandemic caused online grocery sales to increase. 15% more people are doing their weekly shop online than before the pandemic, and most recent figures show that grocery e-commerce accounts for 12.5% of total sales.
e-supermarkets: Ocado, M&S and Waitrose
UK supermarkets have taken advantage of the new demand for online retailing. Ocado has started suppling M&S products after its partnership ended with Waitrose, whilst M&S have declared they are looking to double its food sales, after its clothes and home divisions have experienced a dip in interest. Ocado have been hugely successful this year, with its year-on-year sales rising by 41% in August, and average basket size increasing from £105 to £141.
M&S have developed an additional 700 new lines to fill in the gaps Waitrose have left, yet their e-commerce expansion has been somewhat limited due to capacity issues, which should be resolved next year by the opening of three robotic warehouses at Ocado.
Meanwhile, Waitrose have launched a 30-minute delivery service via Deliveroo, and is looking for new partnership opportunities. Waitrose’s new ‘Rapid Service’ also aims to deliver orders in under two hours. This method is seemingly very profitable, as these select customers buy five times as many premium products as standard waitrose.com customers.
The threat of a recession
But not everyone has jumped on the e-commerce wagon. Lidl’s UK Managing Director, Christian Härtnagel, has claimed that a ‘big crisis, a big recession with tight budgets and inflation,’ is just around the corner, which will stunt the growth of the e-commerce boom.
Härtnagel emphasised that Lidl would be remaining true to its discount model, as he believes that the popularity of e-commerce is only temporary. Instead of investing in e-commerce opportunities, the German supermarket have launched their own loyalty app, where customers receive further discounts on their purchases.
The convenience of home delivery
In 2020, eating in became the new eating out. Home delivery services have been incredibly popular, as the population has been staying and eating at home. Commercial Director of purchase intelligence platform Cardlytics says, “More of us than ever before are choosing to dine in, try at home, or do-it-ourselves, and with brands offering more choice and more delivery options, it’s unlikely the number of us ordering to the comfort of our sofas will go anywhere but up, even after lockdown lifts.”
The turbulent growth of takeaways
Whilst the first UK lockdown began to threaten takeaway giant Deliveroo, as many of the restaurants the delivery service partnered with temporarily closed their doors, the outlook for the takeaway industry is now a lot more promising.
During the summer lockdown, people were initially reluctant to splurge on takeaway meals, but they soon began to miss restaurant quality food. Sales for takeaway services such as JustEat, Deliveroo and UberEats were up 21% in the first part of the year, with JustEat reporting a 44% increase in revenue.
Grocery deliveries growing in popularity
As well as having ready-to-eat meals delivered, we've also been enjoying grocery or even single item deliveries. Independent retailers could really benefit from enabling online ordering and additional delivery services. One retailer said that his sales had risen by a minimum of £2,000 a week after setting up home delivery at the start of lockdown.
Sales director at Blakemore Trade Partners, Louis Drake, believes that consumer behaviour has likely changed for the long-term. “Home delivery is now becoming the normal. Not just for the weekly shop but for smaller baskets and in some cases single items.”
Changing demand for the meat sector
After difficult two years, the ‘back-to-basics’ trend has caused a boom in meat sales, which has benefitted the UK meat market. This trend was around before, but the onset of Covid-19 has certainly increased its popularity.
More people are cooking at home due to closures and restrictions on restaurants and food-service outlets. A September study by AHDB has shown that for the period 23 February to 9 August 2020, overall UK beef sales were up by 7%, pork sales 3% and lamb sales 2%. This is likely to continue into next year, as restaurants, fast-food outlets and cafes are unlikely to return to pre-pandemic levels due to local restrictions.
A survey run by Scotch Lamb PGI revealed that 36% of consumers were buying more locally and 60% still intend to buy locally in the future. Niche butchers and local suppliers can take advantage of this, with their unique ability to provide local, high quality meat directly to consumers. In fact, small and medium sized meat processors, cutting plants, catering butchers and retail butchers have already been benefitting, as they have adapted to present their offerings online for consumers.
62% of the population are more conscious of where their meat comes from, and its traceability, which has made buying local cuts a more preferrable option. Waitrose have reported that searches for native-bred chicken and beef are up 289% and 889% respectively. In short, British butchers and local suppliers are well positioned to benefit from the consumer interest in buying locally and knowing where your food comes from.
2020 has been a difficult year, so congratulations on making it through! We’re proud to say that we supported 100% of our customers to meet increased demand this year, and we’ll continue to provide quality service no matter what the future holds.