Since the onset of the COVID-19 pandemic, we have had to focus on the immediate challenges and priorities. There have been so many hurdles to overcome for the food industry from labour to no food service to a rapidly changing consumer. Many of these challenges will continue through the season for primary agriculture and processing as the labour issue will not be resolved quickly, if at all. Despite all of these challenges, we do need to look to the future. Lead times are so long in food we need to balance between the immediate priorities and the future. There is a shift in the market place that this is ‘how it will be’ and we need to adapt and plan to succeed.

Success depends on understanding your customer’s priorities

Shopping patterns have changed. Consumers are buying different amounts of different products at different times in different places. That is a lot of differences and my advice would be to explore each difference to understand the impact on your products and your markets. One of the biggest challenges is the right amount of stock on the right items. Retailers are trying to figure it out too. Remember to talk to your customers and ask them what volumes they are planning for. Every category is different and I have heard that where some took a dip initially they are now rebounding, which is encouraging. 

Retailers are reviewing their sales data and looking for trends. They are probably more willing to share and have a collaborative approach to figure out the best answer for planning purposes. 

Once you do have a plan for how much to produce, you need to do everything within your power to deliver it. Suppliers who are able to meet their commitments right now are valuable. So many variables can impact this, but when you can deliver what you said you would, it is more important than ever. In the past if there was an issue, alternatives were sourced and usually product was on the shelf. That is more difficult now and the supply chain is more complicated. During challenging times, suppliers who do what they say they will do build long-term relationships.

Communication is very important for both suppliers and retailers. Although you might think they are busy, they do need to hear from you. The people working for retailers are being challenged constantly about the in-stock position of their items. Keep them informed. Knowledge is important; as they need to assure their boss they know what is happening in their category. Managing the category used to be sales and margin. During the pandemic it expands to being able to deliver the inventory they need to reach those targets.

You also need to communicate with your suppliers to ensure you will meet your commitments. Packaging, ingredients and other inputs are all critical to your ability to fulfill your orders on time. You can also share with your customers that you are communicating with your suppliers to ensure product will be available.

One other component of communication is any impact on your cost of goods. The best price increase is one the retailer is ready for and has already decided on before you even have to ask. This is possible when you keep them informed and up-to-date on any changes to your operation. If you need to increase labour costs by 25 per cent because of new staff who are not trained or switching to a more expensive ingredient to ensure you have stock, communicate this to your customers. You might not get the cost up the first time but when you set the table, they will know there is a good chance the increase will have to change your cost of goods.

One of, if not the biggest challenge facing the entire food industry during this pandemic is labour. Maintaining a staff of healthy people who have the skills to do the work that needs to be done is a priority at every level of the value chain. Share your issues and your solutions with your customers. It is important to be realistic. When I was working for a retailer one of the questions I would ask suppliers often was, “how is your labour situation?” Their answer would tell me a lot about their business. My preference was to find the proactive suppliers who found solutions. During these unprecedented times this is even more important. Remember they have labour challenges too and work hard to fill jobs in retail, which are not easy jobs either.

Retailers are starting to look to how they can compete and be successful in a new environment. Work to balance your efforts on the immediate priorities and long-term programs. Remember retailers have some different priorities and how you meet or exceed their expectations can have a big impact on your relationship.

If you have any questions about retailer’s priorities or how the environment is changing please give me a call at (902) 489-2900 or send me an email at peter@skufood.com.

WHAT’S IN STORE?  

Shopping without going to the store

Voilá, Sobeys’ new online shopping and home delivery service, launched in Ontario with a dedicated fulfillment centre in partnership with Ocado. It will be very interesting to see how this changes the landscape where other competitors in the market are focused on picking orders in stores. In some U.S. markets where online shopping has increased, grocers are closing stores to dedicate the resources to fulfilling online orders. This has increased to more than 10 per cent of the market and will likely stay at this level ongoing. Have you tried to buy your items online at each retailer yet? You should.