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Manufacturers need to be ready for the shift to online sales

Food manufacturers are not doing enough to prepare themselves for the online retailing age, Rabobank has warned in a new report.

Online sales were expected to account for a quarter of all food sales by 2030 in countries such as the UK and France, the bank said. This could lead to a fundamental shift in the balance of power between suppliers and retailers, with suppliers set to lose out unless they rethought their ranges, marketing and supply chains.

“The big challenges are visibility and complexity,” said analyst John David Roeg. “Having the right formulation that ties in with tags and search terms such as ‘gluten-free’ or ‘low sugar’ could give suppliers a greater chance of staying visible on screen.”

In addition, suppliers were likely to face more demands from retailers for a wider range of packaging formats, such as formats that were easy to pick by robots, Roeg added. “Manufacturers need to make sure their supply chains can handle this.”

Suppliers should also consider investing in data analysis and technical staff to make sure they fully understood how different retailers’ online platforms worked, he said. “Food manufacturers are not seriously prepared enough for the changes that are happening.”

Chris Bush, Tesco’s UK MD and guest editor of The Grocer this week, said even apparently small changes online could have a potentially huge impact. “Every time a retailer launches a new app, it’s the equivalent of opening 500 stores. The reach is phenomenal.”

He added that online retailing presented challenges and opportunities that retailers and suppliers needed to work on together.

“Online trading and the bricks and mortar part of the business are different skills,” he said. “In store, we have straightforward ways to delight and surprise our customers. The question for us is, how do we do this online?”

Read this: 10 e-commerce lessons for food manufacturers