Retailer Responses to COVID & What Suppliers Should be thinking

18 April 2020

The COVID crisis is a black swan. An almost unprecedented and unforecastable event that is having and will continue to have a profound effect on life in the UK.

For Grocery retailers it has been the ultimate test of their operational resilience. And it’s a test that most have passed admirably. Availability, at one point down to near zero in parts of the store, has already returned to +95%. The nation is being fed and mass panic averted largely thanks to the professionalism and resilience of the food supply chain.

When an emergency strikes in food retail Supply Chain takes over. Getting product from A to B to C becomes the #1 priority because without it nothing else can happen. Retail will come a close second, a herculean effort of leadership and communication. Marketing has to pivot, adapt tone of voice and rapidly repurpose paid for media. Commercial is much lower down the pecking order – range, merchandising, price and promotions all become almost irrelevant in context. But as demand settles and retailers adapt to the new normal the balance will return and buyers will start planning ahead.

So what should grocery suppliers be doing and thinking to make sure they’re in tune with their retail partners and planning appropriately?

Now

  • Manage your communications carefully – be concise and transparent always
  • Be flexible – plans are necessarily in flux so be prepared to adapt
  • Deliver – what changes could you make to ensure on time in full supply
  • Focus on the now – it’s not the time for negotiation behaviours

Thinking further ahead

  • The 4 P’s – Price and Promotion strategies are unlikely to change post COVID but attitudes on Place (channel) and Product (range) almost certainly will
  • Place – Online will become proportionately more important so make sure you understand how to optimise your online sales and relationship with retailers
  • Product – Ranges have been cut back by up to 30% in some categories and retailers looking for future efficiencies could think twice before putting it all back in. Don’t hold on to tails for the sake of it and make sure you understand and can prove the role products play in the category
  • Recession – customer behaviour changes in well-known ways during harder economic times e.g. trading down between retailers, trading down product tiers and often into own label. COVID impacts are likely to be disproportionate felt by class and geography. Plan ahead to take advantage or mitigate risks

The UK grocery industry should be proud of its response to this crisis and is rightly getting praise from the public. Thoughts will be turning to H2 and post COVID. Smart suppliers always put themselves in the retailers’ shoes to stay ahead. Now more than ever that’s going to be pivotal to success.

By James Bailey, Verlinvest Operating Partner and Ex- Buying Director at J. Sainsbury’s

People in this post: James Bailey

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