Grocery can't pretend that the rise of disrupting channels isn't happening
Since 2012, the way in which the UK shops for groceries has changed. Kantar shows that Discounter share has doubled (9% to 20%). Online share has trebled (4% to 13%). Big store checkouts are far less busy (70% share to 53%). Step back and think about it. It’s an extraordinary amount of change.
So what next? Could it happen again? Could we see more seismic changes? There is a lot happening out there. Lots of noise about Quick Commerce (Getir, Gorrillas, Snappy Shopper). Significant volumes in some categories going direct to consumer via subscription (shaving, coffee capsules). Bother.com persuading shoppers to get the “boring” repetitive stuff online with them, and do the fresh stuff locally. Gousto, Hello Fresh and Mindful Chef growing fast. Gousto for one telling a compelling story about a future of personalised nutrition, sustainability, and a better way of doing meals.
The fundamental challenge right now for suppliers considering these emerging customers, is understanding how significant they are, and are likely to become. Finding and servicing them will likely add cost and complexity. Is it worth it? How do you know?
“What gets measured gets done” and if you can’t see the growth of these disruptors, you might find yourself thinking it isn’t there. This is what happened to many companies when Aldi and Lidl surged in the last decade. Nielsen and IRI scanning did not pick up Aldi and Lidl sales. So it was common to hear companies comparing their performance in the Big 4 retailers to a “total market” benchmark from scanning – blithely ignoring the most important dynamic in the market. “We are growing at 1%, the rest of the market is flat, so we’re winning. Never mind that Discounters are growing at 20%”. Kantar did and does measure the Discounters and was therefore the best measure of the big picture changes in the industry. But still, many people looked away, perhaps because it was more palatable week in week out, to keep the benchmark less challenging.
So how can you avoid this trap? How do you get visibility of the new entrants and emerging channels? You can be sure the data providers are working on it right now, but in the meantime, companies are having to rely on piecing together information from various sources. What these new entrants are saying publicly and privately. What people can glean from their industry networks. Ad-hoc surveys asking consumers to report what they are doing. For an industry used to being so well served with high quality purchase behaviour data, all this can feel uncomfortably home-made. But this is the best you can do for now. It’s better to have a hazy view of the developing landscape than to pretend it isn’t there at all.
The companies who can get a clearer picture of what is actually happening, will be best placed to pick the right places to play. Insight and Category people should be thinking now about how to get to that clearer picture. Just because you can’t see it, doesn’t mean it isn’t there.
Jeremy Garlick is a Partner of Insight Traction, consulting with FMCG and Retail companies. He was formerly Head of Insight at Sainsbury’s, Waitrose and Premier Foods.