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Future of Food; Retail Edition

schedule 8th November 2018 by Virtual College in Virtual College

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Our ‘Future of Food’ article series seeks to reveal more about some of the major trends, developments and issues facing various industries in the food sector. In this article, we’re going to look at food in the retail sector in particular, and the changes that are impacting on retailers both small and large, as well as where the market is moving.

Market Movements

The food retail market in the United Kingdom is certainly a large one, but with the major supermarkets taking around 70% of it, it’s one that doesn’t always attract much interest. We hear about the jostling of Tesco, ASDA, Sainsbury’s and Morrisons, but not necessarily much about the smaller retailers and their activities. Incoming trends could change that however.

Convenience is one of the areas in which this industry is likely to see growth, and an area in which there will certainly be interesting developments in the near future. From 2017 to 2022, it’s expected that this subset of the market will grow by an impressive 22%, driven by more and more consumers looking for fresh and on-the-go options quickly. Millennials in particular are having a big impact, with around a quarter of them doing their weekly shop in a smaller convenience store rather than a supermarket, and this rate is only increasing. Many of the subjects we’ll discuss in this article will be particularly important for the convenience market, both large and small food retailers included.

One of the big shifts we’re seeing in the food market is the ever-encroaching reach of the big players in tech. With companies such as Amazon naturally at the forefront of that. Amazon’s grocery offering is now available across much of the UK, offers rapid delivery, and prices that compete directly with the large supermarket offerings. This is likely to have a major impact on the convenience market in particular, now that consumers have quick access to just a few things that they need. Ordering the food shop online is certainly nothing new, but this speed, and the cost effectiveness of being able to get just a few items, certainly is.

Of course, physical stores are never going to go away when it comes to groceries – consumers like to see the food that they’re buying, and general browsing is still a very strong driver. But Amazon know this, which is why they’re combining their technology with food retail.

This leads us on to our next subject; the way in which digital technology is moving into the physical retail space.

Smart Retailing

In the US, Amazon has launched its Amazon Go brand. Each Amazon Go store, of which there is currently only a handful, is essentially an automated grocery retail unit. By using a variety of technologies, including AI, computer vision, and complex sensors, Amazon is able to have customers simply walk into the store, pick up what they need, and leave. The requirement for cashiers and a lengthy scanning and payment process is completely gone, leaving a seamless experience that makes other food retailers appear bureaucratic in comparison. There are certain staffing requirements that still need to be met – food hygiene for instance is still a major priority, with food hygiene certificates a requirement for those working in such stores. Stocking is still mostly manual, but the customers themselves see very little human activity.

This introduction of complex technologies isn’t just limited to the customer experience either. Amazon is using it to improve the supply chain and stocking processes to make things as efficient as possible. For food retailers, supply and storage can be a real headache, with the issue of shelf life never far from becoming a problem. Retailers must balance good stock levels against potential waste, and ever increasing levels of technology could be the solution, by providing retailers with the information they need to make even better judgements.

While this technology might seem like the preserve of only very large businesses, it’s something that smaller retailers might look to take advantage of in the near future. Food retail is undoubtedly dominated by the larger market players, but that doesn’t mean that smaller businesses can’t carve their own niche, provided they have their USP.

Vegan and Vegetarian Options

This is one of the subjects that’s going to be really important throughout our ‘Future of Food’ article series. It’s potentially a major shift in consumption habits, and therefore something that’s likely to affect a huge number of food businesses, no matter what particular industry they’re part of.

Vegan and vegetarian diets are undoubtedly on the increase, with more and more people in the UK looking to either cut out meat or all animal products completely from their diet. Or reduce their consumption of them. Around a quarter of all evening meals eaten in the UK are vegetarian, and estimates put the total number of vegans and vegetarians at around 10% of the UK population.

If they haven’t already, food retailers need to start thinking very carefully about their product range and how it caters to those who don’t want to eat meat or any animal products at all. 10% is a considerable portion of potential customers, and with many ‘flexitarians’ who simply want to reduce their intake, it becomes apparent that products must be varied. Given the wide range of options now on the market, vegetarians are no longer satisfied with afterthoughts, or they will shop elsewhere. Retailers should have little excuse here, as there are plenty of manufacturers and products on the market to serve these customers. The major supermarkets have increased their shelving space recently, and brands such as Oumph! have made their way over from the continent. Wise retailers should look to take advantage of publicity where possible; Tesco for instance, received major social media attention when they launched their vegetarian steak - complete with fake meat juices courtesy of beetroot juice.

Vegan options are certainly harder to cater to than vegetarians, but they too need to be given consideration. Quorn and similar brands are expanding their range to include vegan alternatives.

Sustainability

It doesn’t matter what industry a business is part of, sustainability is likely to be a significant topic. In food retail, there’s a huge number of things that businesses are looking at.

The first issue, and the one that’s been hitting the headlines most significantly over the last year, is that of packaging, and disposable plastics. Straws and cups are the major topic of contention, but all types of packaging have received significant criticism for being excessive and non-recyclable. There have been various impressive innovations in this area, with plant based products that are virtually indistinguishable from plastics a particular highlight, but non-recyclable plastics are still prevalent. Major supermarkets have made pledges to reduce their reliance on such materials, with ASDA even launching an initiative to reward staff who come up with their own ideas on solving the issue. Smaller businesses must do the same if they are to challenge other retailers for their market space. The supermarket chain Lidl have also pledged to stop using black plastic packaging for its entire fruit and vegetable range due to it not being recyclable.

Indeed, there are also suggestions that the EU might ban certain single use plastics, which might not directly impact food retail, as the target is currently take-away food containers and accessories such as cups and straws, but it does indicate the direction in which legislation might be moving. Depending on what they stock, retailers might not have complete control over the packaging for the products they sell, but this doesn’t mean that they can’t have an impact. Just as consumer demand influences retail choices, retailers should be able to encourage their suppliers to make certain changes. It’s preferable for retailers to make a stand for sustainability before waiting for customer pressure or legislation.

Sourcing is of course another hot topic. The focus on local produce isn’t a new one, but it is one that is likely to continue as consumers become increasingly aware of the environmental impact of sourcing food from the far corners of the world. Polling has suggested that people are willing to pay a little more for sustainably sourced food, but this doesn’t always directly translate into sales, so education is still required. There’s certainly space for food retailers to shout about their environmental credentials.

This links in strongly with smart shopping. There’s a real attraction growing for ‘hyper-local’ grocery shopping, with food grown in the community, and we’ve already mentioned the growth in convenience. Retailers need to work out how they can use technology to deliver locally sourced, ethical food, as close as possible to customers.

Summary

Food retail is entering a very interesting period of development. The internet has fully matured, but hasn’t necessarily revolutionised the way that people shop for food. Many of its big players and technology are however coming for the market, and could make very big changes in just a short space of time with their focus on rapid home delivery, hyper-locality, and in-store tech. Alongside this, consumer attitudes towards the environment are becoming more focussed, with less tolerance for any products that are harmful to the environment through their packaging or supply. Finally, consumer dietary choices are constantly evolving, with a drive for less reliance on animal products the biggest influence currently.

Here at Virtual College, we aim to ensure we keep abreast of all relevant development in the industries we offer training for. Visit our food and drink page to find further articles on the subject, as well as links to some of the relevant courses that we offer. We specialise in food safety online training, with courses containing information specific to retail.

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Author: Virtual College

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