There is real hope – though no certainty – that we are now plotting a way out of the Covid disaster. With that in mind, and with holidays approaching for many, it’s a good time to reflect on the situation and prospects for our industry.
Pre-Covid, the key dynamic in UK grocery was the rise of the discounters. That stalled in 2020, with Aldi’s share in particular struggling, but we are now seeing a new wave. Aldi achieved its highest-ever share in recent Kantar data.
Then during Covid’s first year, the biggest dynamic was the shift to online shopping. Online’s share has recently dropped back, with over half the population now vaccinated. But it remains about double its pre-Covid level, and is likely to grow further in the long term.
And we’re seeing remarkable levels of activity and investment in ‘last mile’ delivery (Gorillas, Snappy Shopper, etc.). It’s already clear there is a willingness to pay for delivery on smaller baskets, in certain circumstances – it’s less clear how many people will pay and how often. Tim Steiner of Ocado recently raised this question. Deliveroo and Uber Eats have also seen huge growth. Again, much of that new behaviour will endure, albeit not at 2020 peak levels.
Meanwhile, convenience stores saw a boom in the first lockdown, but their market share has recently dropped back to levels similar to pre-Covid.
So there’s a lot of change. But what does this all mean for suppliers and retailers?
For retailers, it will be about tracking and understanding these channel shifts and deciding which ones to be famous for. So in discount, this is primarily the battle between Aldi and Lidl, though B&M and others might have something to say on that. In convenience, Co-op has brilliantly planted its flag – can anyone respond?
In meals for tonight and treat occasions, M&S has great history and is revitalised. Ocado might claim to be delivering best for big shops online, but Amazon lurks. In last mile delivery, anyone could win. And for the big four – increasingly a misnomer – the reality is they need to win in several of all these channels.
For suppliers, it will be about keeping an eye on the exciting, emerging channels and serving them affordably. But they must avoid taking their eye off where the mass of volume will remain for the foreseeable future: the established grocery players, who expect and deserve the lion’s share of attention and investment.
The pace of change isn’t slowing. Working life isn’t getting any simpler. Looking on the bright side, we are working at a fascinating time, in a fascinating industry. All together now for the next phase.