Mike Foster, Founder & Creative Director, discusses how new and niche brands can get their message across as Covid-19 changes the groceries marketplace.
3rd June 2020

Brands need to explore new routes to market

In the aftermath of the Covid-19 pandemic, how will your brand break through in an ultra-competitive groceries marketplace? One consequence of the crisis is going to be the squeeze on new entrants and smaller players. That’s not necessarily disastrous, with plenty of new ways to make yourself heard, but you are going to need a different approach.

To see why first consider how in-store grocery shopping continues to change. At the start of the crisis, the supermarkets took an axe to their product ranges as they sought to cope with panic buying and keep shelves stocked. While those pressures have receded and some lines will return, supermarkets are unlikely to revert to their full pre-pandemic ranges. Large supermarkets have been seeking to reduce the number of lines for years—to better compete with the discounters, which keep costs partly by offering fewer choices.

In any case, even where new or niche brands are available in physical stores, shoppers will be less likely to find them. The social distancing rules set to remain in place for some time following the pandemic will not encourage browsing, with shoppers keen to get in and out of stores quickly after queuing, and nervous about loitering in the aisles.

Online grocery shopping, meanwhile, is likely to maintain the surge in popularity it has enjoyed during the crisis. That’s bad news for less-established brands because online supermarkets are designed for convenience rather than discovery. They’re simply not set up to encourage shoppers browser and discover new products, making the first few products displayed from a search more likely to make it into the basket. That’s if you search at all, often people are just repeating the same order week to week.

How new brands can fight back

At first sight, the Covid-19 pandemic looks like unmitigated bad news for brands seeking to make an impact in the groceries sector. But there are reasons to be hopeful, with a new ecosystem of platforms now developing that could offer smaller players an alternative route to shoppers’ baskets.

One possibility will be to leverage new channels that expressly cater to consumers seeking out smaller brands, premium products and new experiences. Just as channels such as Not On The High Street have been hugely successful in helping smaller businesses and independents reach online shoppers in the non-food market, so new players are emerging in groceries.

Mighty Small, the self-styled “supermarket of small brands” is one good example, but bigger players are getting on the act too. Facebook’s launch of Facebook Shops offers a potentially exciting new marketplace through which retailers can target the social media giant’s users, including those on Instagram. Moreover, many such innovators will enjoy a fair wind thanks to Covid-19. The pandemic has renewed many shoppers’ interest and faith in local suppliers, as butchers, bakers, grocers and the good-old milkman have kept deliveries flowing. Elsewhere, food-service suppliers have pivoted into the consumer market as their usual customer base has disappeared, further boosting awareness of what specialist, high-quality providers have to offer over and above traditional supermarket fare. The crisis has created new demand, and it can be sustained.

Indeed, the direct-to-consumer approach has appeal to large and small producers alike. PepsiCo, for example, has launched PantryShop.com and Snacks.com, through which consumers can buy its products directly, rather than through traditional retailers.

Curators and aggregators trusted by shoppers to recommend and introduce them to new brands will undoubtedly have a role to play. Good Eggs, a San Francisco platform set up to intermediate the relationship between consumers and premium products, is just one example of what is possible in this area. Others will follow.

There will be other opportunities too. The rise and rise of the subscription model has proved that smaller brands and businesses can still achieve cut-through in the direct-to-consumer market. The model does not suit every groceries brand. Yet, even before the pandemic, it was proving popular, particularly with shoppers looking for artisan foodstuffs – high-quality cheese, vegetables, coffee, wines and so on. As consumers seek reliability, sustainability and the personal touch, the right subscriptions have every chance of gaining share.

A mix of the old and the new

Nor should brands feel they have to turn their back on more established online routes to market. Indeed, there may be mileage in exploring new opportunities with the online supermarkets, with apps that offer better discovery or advertising functionality to platforms such as Ocado. Social media channels provide an important means through which to build discovery; Instagram has obvious potential. In short, there will be no one-size-fits-all solution for brands seeking to breakthrough in this new world – no silver bullet with which to eliminate the problems posed by Covid-19, whether online or offline. But brands will nonetheless have many new opportunities to ensure new customers can discover what they have to offer.

In a more fragmented marketplace, the idea of “omnichannel” retailing will be ever more important, but with imagination and experimentation, breakthrough brands will continue to succeed. Just as important, that will enable grocers to maintain and enhance consumer choice still further.