Since S4RB was founded 10 years ago, the retail landscape in our homeland of the UK has seen seismic shifts on several fronts. We have had the challenge and privilege of helping well-known private brand retailers, as well as some less well-known ones, to navigate the turbulent waters of change. In our anniversary year, we’re taking stock, looking back, and asking ourselves what comes next - so that we can continue to deliver innovative solutions for our clients who want to push boundaries and deliver the top-class retail experience that the British public demands.
How has grocery retail changed in the last decade?
It will surprise nobody when we note that significant technological strides have been made in the last decade. Change both inside and outside their sector has allowed retailers to listen better to consumers, and to deliver products and services they really want. Thanks to social media – in particular Facebook and Twitter – a great deal of information about consumer preferences is available to those who know how to listen well. On the flip-side, of course, it is now easier than ever before for one person’s negative opinion to be heard by a huge online audience, and to influence other shoppers. Advances in technology have also underpinned the explosion in popularity of online ordering – up to 48% of UK households now shop online.
At the same time as increasing numbers of Brits are having groceries delivered to their front doors, discount retailers – who offer cost savings, rather than convenience – have experienced exponential growth. Convenience stores, too, have found renewed consumer interest and have invested in making their stores more appealing and easier to access. Consumers now have a great deal more choice when it comes to what they feel is important in the shopping experience, whether that’s price, convenience, quality or prestige.
The final, and arguably most significant area of change from the past decade has been the increase in awareness and concern about the content of the food we buy. There is growing demand for transparency about where ingredients are sourced, how sustainable they are, their quality, and their nutritional content. As the internet has empowered more people to educate themselves about the kinds of food that are good for them, so the calls for products that meet increasingly high standards has grown.
Through all this upheaval, UK retailers have been constant in their commitment to private brands. Having a product range that is unique to your supermarket not only offers higher profit margins, but much more importantly provides a compelling reason for shoppers to keep coming back and to develop brand loyalty. Retailers have had to adapt constantly to ensure that their private brand offerings remain competitive, resulting in a marketplace full of exceptional products.
The current landscape
The majority of private brand products available in UK stores today still mimic national brand items, offering consumers credible alternatives to big household names in key areas. There has recently been a particular emphasis on expanding premium ranges, as price-conscious but aspirational shoppers seek the balance between high quality and affordability. Some supermarkets have even teamed up with celebrity chefs to give their top-tier brand the edge over competitors.
The move away from heavily-processed foods is accelerating, with ever more focus on food’s nutritional content and an impending government tax on added sugar. This nutrition-focused mindset has created favourable conditions for niche ranges – such as “artisan”, vegan and gluten-free – to be greatly expanded. Alongside transparency about ingredients, retailers are also increasingly focused on delivering sustainable products, whose ingredients, manufacture and packaging are all as environmentally friendly as possible.
The hugely-popular budget retailers are not exempt from the drive towards healthy food and sustainable manufacturing and packaging. They often manage to put some of the larger, more traditional retailers to shame with both their compelling products and their sustainability strategies.
Predictions for the next 10 years
For the “big four” retailers, it is likely that the next decade will see a reduction in the number of superstores, and a shift in focus towards online delivery services and smaller convenience stores. Easier, faster and smarter internet shopping is a given, as is the evolution of discount chains, who will continue to strive to fill gaps not satisfied by bigger retailers. As these budget chains mature and grow, their increasingly complex operations may lead to uncertainty or even failure – just as the last decade saw the demise of some well-known supermarket chains.
Brexit will doubtless make its mark on the UK retail sector. It is very likely, for instance that more produce will be UK-sourced, and therefore that certain food items will only be available seasonally in many shops. And although there will no longer be a requirement to comply with EU standards on nutrition, labelling or packaging, there will doubtless be new, home-grown guidelines that retailers will have to adhere to. The consumer demand for transparency and clear labelling will remain strong.
Finally, health-conscious consumers, and those who are concerned about the provenance of their food, will continue to shape the industry. Rather than offering factory-prepared meals, supermarkets may increasingly prepare ready-meals in-store - much as Harrods and the US health food chain Whole Foods have begun to. However, they will need to continue to strike a careful balance between handcrafted food, appropriate pricing and convenience for the customer.
The approach that S4RB has taken over the past decade to help retailers deal with the challenges they face is to engage with private brand suppliers so that they work as One Team with retailers. The close collaboration fostered by our software and service solutions enables retailers to be responsive to their consumers’ demands and to look to the future with innovative new ideas and products. This, in turn, leads to long lasting and profitable partnerships for both suppliers and retailers. We look forward to the next 10 years.