How many people have you heard say, “2020 has been quite a year, can’t wait to see it wrap up.” I hate to be the bearer of bad news, but just because we flip the calendar from December 31, 2020 to January 1, 2021 not much will change. The world will still be struggling to contain the pandemic and the food industry will need to find people to produce food to feed consumers that have changed so much in a very short period of time.
As we enter a new year, we should be ready for it. Despite the challenges of 2020, we need to be ready for 2021.
Perhaps a lot of your planning is in place which is great. It has been difficult to look too far forward so you might be planning for the new year but not as far out as in previous years when you had a better sense of the volume and the marketplace.
To prepare for 2021 there are some considerations:
1. Your sales history
The year started off as you probably would have expected and then in March so much changed. Review the fluctuations in volume and try to reduce the impact of any stockpiling or panic buying on your sales. If possible, you want to find your baseline volume in 2020. This would be your regular weekly volume, without ads or other fluctuations. On average, food retail seems to have been up 10-15 per cent, when compared to previous years. Obviously, every item performs differently and even the retailers are getting different results as consumer shopping patterns change.
It is important to look at your history by customer as some volume has shifted in the market.
2. People will continue to work at home
This change in consumer behaviour will likely continue for some time. People have learned how to work differently. It does have an impact on their eating, especially if your product can be consumed as part of lunch. There is also more snacking at home.
3. Consumers are shopping differently
Most people want to get in and out of the store as quickly as possible. Items that relied on impulse sales really need a change of strategy. The best approach is to get on the shopping list before consumers go to the store or complete their online order.
It is time to shift investments from in-store programs to opportunities where you can get their attention when they are making a shopping list or planning meals for the week.
4. Travel and mobility will still be reduced
Travel restrictions remain in place and the 14-day quarantine for any out-of-country travel really does limit the numbers. Events and other gatherings will be curtailed for early 2021. Consumers will be home more and looking for more interesting food. They will also need help to prepare it and enjoy it.
5. Online shopping will continue
We know more consumers are buying more food online than ever. Estimates range from 12-15 per cent of total food is being purchased online. This would include click and collect, direct selling and delivery. Depending on which model you and your customers use, this can impact your sales. This might also be an opportunity for incremental sales if your presence in this channel has been limited.
6. Restaurants and other food service will be down
People are eating more at home which means restaurants and other food service establishments will struggle. If you sell into retail this means more volume but if you sell into food service, it means less. Many of these establishments have increased their capacity for delivery, however volume is still down.
Once you review your history and factor in the issues impacting your volume, you should be able to put together a forecast for 2021. Use your starting point to begin the conversation with your customer. You need to know what they are thinking and if your assessment is in line with what they see. Retailers prefer suppliers who bring a starting point, not an open-ended question.
WHAT’S IN STORE?
Food waste is still on the radar
Certainly 2020 has changed the focus for many in the food industry. Service level and the shopping environment increased in importance as suppliers and retailers had to learn to operate in a new environment. Despite these changes, food waste continues to be a major issue. We did not hear as much about it during 2020 but it is not going away.
Recently Sobeys implemented an in-store campaign with Love Food Hate Waste to increase awareness and provide some proactive solutions to consumers in store and on its website. All major retailers in Canada with the exception of Costco made a commitment to reduce food waste by 50 per cent by 2025. Suppliers need to be thinking about their role in this initiative.
Peter Chapman is a retail consultant, professional speaker and the author of A la Cart-a suppliers’ guide to retailer’s priorities. Peter is based in Halifax, N.S. where he is the principal at SKUFood. Peter works with producers and processors to help them get their products on the shelf and into the shopping cart.