To provide our clients with global insights throughout the pandemic, Advantage conducted dedicated research to gather the perspectives on how retailers and suppliers are being impacted and are adapting in key markets around the world: China, Brazil, Italy, Spain, Portugal and the UK. We have also collected detailed feedback from the remainder of our 40 markets. Their stories explore the tensions brought about by the crisis and the need for collaboration to solve them. They also address how retailers and suppliers continue to adapt as the crisis rocks the rank and file and pressures them to future-proof their businesses without certainty of what the ‘future’ looks like. Indeed, the future holds more questions than answers, but reflecting on these questions and planning for the potential scenarios will put us in a better place going forward.
Without warning, the Coronavirus swept across the world driving individuals into their homes as social distancing measures were implemented across communities, provinces and nations. This necessitated retailers and suppliers around the globe to retool to adapt to monumental shifts in consumer behaviour. The first markets hit by the pandemic continue to pave the way for the rest of the world and provide valuable learnings as the grocery industry passes through the short, mid and long-term stages of the crisis.
Over the past several months, collaboration has been a fundamental pre-requisite for all suppliers and retailers. In fact, the need for collaboration, along with an understanding and empathy for the needs of others, are overwhelmingly noted as the most influential aspects of supplier-retailer relationships during the pandemic.
The need to partner in support of the same end goal, getting consumers the products they need to survive, has strengthened cooperation between retailers and suppliers. Simply put, the crisis has led to a greater appreciation and understanding of the challenges that the other side faces in the retailer-supplier business partnership. Collaborative relationships built on mutual trust have accelerated and reached new levels of intimacy while adversarial relationships have rapidly shifted into partnerships as both parties gained a real sense of “we are in this together”.
Retailers and suppliers around the world share the ways that they have raised collaboration to unparalleled heights: constant communication, sharing and transparency, working for win-win outcomes, focusing on problem solving and compromise, and being empathetic to each other’s needs. While other tactical adaptations reflect the stage of crisis and other market realities, these encompass the basics tenants that got us through to our present reality, and that will continue to yield efficiencies and results as economies normalize.
The outcome of the crisis is what we are seeing evolve in real–time and what showcases the industry’s ability to respond to a crisis. The industry established capacity and capability for new ways of working with agility and efficiency and in many cases doing “better with less” i.e. fewer people, less time and less information. It continues to be a credit to the industry how well suppliers and retailers have each and collectively managed through this COVID-19 crisis – for the most part a shining example of how collaboration can make an impact for good – keeping economies, societies and households functioning during a time when much activity has come to a standstill.
All things are not equal however, and as in all realities, it cannot be said that all retailers and suppliers have adopted or adapted the above practices as well as others, and certainly some have evolved their capabilities and competencies faster than others. Those that already had a collaborative business model in place found it easier to adapt and dial-up existing practices and ways of working, but for others it meant a shift in mindset and culture which resulted in these companies lagging behind. Some reported their business partners lacked clarity and had unrealistic expectations and were unreceptive to listening and working together.
Many of the capabilities and ‘new ways’ of working that retailers and suppliers have implemented over the past several months will persist after the crisis subsides as they have uncovered learnings to apply on an on-going basis. The lesson of collaboration is one that continues to build across all markets as more and more news sheds light on partnerships, co-creation with competitors, and collective support to essential organizations and the wider public.
As we enter the next phase of the pandemic, retailers and suppliers will brace for the long-term and begin to future-plan. In doing so, they will need to foster cooperative ways of working for the betterment of their respective and collective success. While no one knows precisely how it will look, the following questions may help in compassing the path beyond the pandemic:
Virtual ways of working in many cases have saved time and money and facilitated swifter decisions to get more done. While offices will re-open and in-person meetings will slowly resume – the Industry has realized that a lot more can be done remotely. Nonetheless caution may be warranted as these have not been normal times, people have been focused on keeping their jobs and without the temptations that can distract focus, will a work from home model work as well once the crisis subsides?
Over time has the industry let assortment and promotions get overly and unnecessarily complicated? Category assortment may come under the microscope on a long-term basis as Retailers have seen that they can serve the needs of their shoppers with a more concentrated offering. This would challenge suppliers to be more efficient in their new product development plans to fulfill unmet needs versus offering more choice for existing products.
Everything is up for review, we cannot just assume that it will even make sense to follow-through on plans that were in place before the crisis hit, for the reasons above and more. What do consumers want and expect right now, what products and messages will hold the greatest appeal, and will any be inappropriate in the ‘new normal’?
For example, suppliers have had to experiment with ways to bypass retailers and get products into consumers’ homes during the crisis and in some cases, governments have loosed regulations on sale of products like alcohol allowing new routes to market. Can retailers and suppliers find ways to collaborate to support the merging lines (and in some cases competitive nature) of one another’s business models?
The most important takeaway from our global findings is for the industry to look back at their learnings from the crisis to plan for the next phase. Suppliers and retailers need to consider these questions and decide on their future, not letting the wealth of insight and learning available from this crisis go to waste. No one knows for sure how our global economy will evolve and whether there will be a ‘new normal’ or if after a while, things will just revert to how it was pre-crisis. There are many predictions and much conjecture, but we will continue to learn in real-time. The retailers and suppliers who continue to stay close to the pulse and respond with agility will still be in the game. Those that do this in collaboration with their business partners will set themselves up to win.
Germany has been affected by the pandemic in a very similar way to the rest of the world. Hoarding and empty shelves due to delayed deliveries were some of the phenomenon witnessed during the early phase of the lockdown.
The German CPG industry has tried its best to stay calm and react pragmatically to these new challenges. The logistical challenges were, for example, described as “just like Christmas only without lead time”. One of the consequences was that many retailers decided to put a halt to promotions, which led to an increase in average grocery prices.
Another effect was that online grocery buying increased by 30%. Non-food online purchases increased by even more than 30% and have kept freight forwarders very busy.
Most shoppers have reduced the frequency in which they go to the stores, relying on one main retailer for their weekly grocery shopping. Because of this, people are tending to choose supermarkets over discounters as their primary shopping location as supermarkets provide the wider selection and ability to get all their products in one visit. Consumer surveys are showing that price is less important during COVID-19 and that this could stay the case post-virus. It is also observed that regional products are becoming more popular, and these are generally not available from discounters.
Suppliers with a significant share of sales in the restaurant and out-of-home channel are facing a significant loss of revenue.
The meat industry in Germany was negatively affected as many workers were infected with COVID-19. Thus, many factories had to shut down their production. Price increases are predicted as one of the consequences of this.
Retailers and suppliers are still facing challenges in daily business, but they are recovering slowly from the worst of the situation. Demand volatility and availability of specific goods are still challenging.
Some suppliers and retailers are dealing with period revenue loss of up to 40%, but most of them are optimistic that this will be made up by the end of the year.
Overall, while presenting challenges, the pandemic has had a positive impact on the German CPG industry as its image has improved in various ways. Grocery store employees have gained a lot of respect and appreciation from the public, and companies in the industry have increased their reputation as responsible employers.
The industry is pushing for further easing of restrictions as they are hoping to retrieve sales losses as soon as possible (assuming safety guidelines are properly followed). While the government is withdrawing some restrictions, people do not seem to be quite ready for a complete “return to normal”. Town centers are far from being as busy as they were before the pandemic and purchase behaviour, in general, is still rather restrained due to several reasons:
Slowly but surely, normalcy is starting to return. Retailers are resuming some in-store promotions to stimulate additional sales. Stockpiling has ended and consumers are starting to purchase as they did in the past. And as a stimulus measure, the government is considering issuing citizens with “consumption vouchers” to boost spending.
The work environment of our clients is also starting to return to normal. With demand and supply stabilized, they are refocusing on production rather than on solving logistics challenges that manufacturers had to solve when the crisis first hit. Face-to-face meetings between retailers and suppliers are taking place again, although some retailers are erring on the side of caution and prefer to delay face-to-face meetings until autumn. With the worst of the crisis hopefully over, both suppliers and retailers are once again able to start planning for next year and are preparing for tough annual negotiations – a true sign that business in Germany has returned to normal.
There were some temporary, quick fixes done to deal with some of the supply issues faced. For example, to ease logistics bottlenecks, there was a temporary suspension of the Sunday traffic ban for trucks. Supermarkets also started to produce their own yeast to cope with the shortage of this product.
One of the main longer-term impacts will be an increased reliance on people working from home offices and the resulting changes in communication. The share of home office workspaces is expected to increase significantly after the pandemic, as the flexibility and convenience have generally been viewed as enriching to the German work culture. Companies have started to rely on and accept the value of digital communication tools and software such as Skype, Microsoft Teams and WebEx; this will contribute to better and faster development of digitalization in the German workplace.
As with any crisis, there will be some winners and losers, with some suppliers and retailers downsizing, while others go into acquisition and growth mode. Dr. Oetker, which produces heavily demanded products like oven pizza and baking powder, is doing very well and has announced that they are planning acquisitions. While Karstadt, a department store, is having to close 80 of its 160 outlets.
@WalmartInc highlights American supplier efforts in adapting to consumer need and ramping up production of essential products during the peak of #COVID19 #manufacturing #BetterTogether https://t.co/nKbpoA5jyL...Read More
@Unilever builds AI-integrated flexible working program for its global associates, matching skills and competencies to new projects across the business #EmployeeEngagement #BetterTogether ...Read More
"What COVID-19 Has Taught Me": 7 Johnson & Johnson Researchers Reveal Lessons They've Learned From the Pandemic @JNJNews #frontlineworkers #COVID19 ...Read More
@amazonpay now allows you to buy from local stores and pay via QR code @amazon #shopsmall #BetterTogether via @EtRetail...Read More
@pepsi joins National Restaurant Association of India @NRAI_India, @swiggy_in initiative to provide 25 lakh meals to workers of the restaurant community in distress @PepsiIndia #PepsiSaveOurResturants #CommunityMakesUs #BetterTogether ...Read More
@Diageo_News launches $100 million recovery fund to help pubs and bars welcome back customers after lockdown #BetterTogether #Raisingthebar ...Read More
New @Walmart Health brings affordable and accessible healthcare to Springdale community #Innovation #HealthcareForAll #BetterTogether ...Read More
@CocaCola and @UberEats partner to provide up to 5 Million meals to @FeedingAmerica #CommunityMakesUs #BetterTogether ...Read More
@Lysol expands HERE for Healthy Schools Program to reach 58,000 schools in U.S. areas hardest hit by the #COVID19 Pandemic @discoverRB #CommunityMakesUs #BetterTogether ...Read More
As the US reopens, @ProcterGamble Safeguard brand announces $10 Million hygiene education and product donation initiative to help keep children healthy #SafetyFirst #COVID19 https://t.co/eUW6L0zQGR...Read More
@KCCorp launches EssentialPraVC, a direct online sales platform for Brazilian consumers; offering a new way to purchase from the safety of their own homes #ecommerce #onlineshopping #BetterTogether ...Read More
@amazon announces Thank You bonus for its front-line employees and partners totalling over US$500 million #EmployeeAdvocacy #BetterTogether ...Read More
General Mills launches three-year regenerative dairy pilot in Michigan in partnership with Foremost Farms and Understanding Ag @GeneralMills #BetterTogether ...Read More
@Bayer to Provide Crop Relief to Two Million Smallholder Farmers Impacted by #COVID19 #BetterTogether...Read More
Amid #COVID19 Global Pandemic, The Pfizer Foundation Helps International Rescue Committee (IRC) Pursue Urgent Expansion of Health Access in Humanitarian Settings @pfizer_news #FrontLineHeroes ...Read More
@GSK COVID-19 vaccine development collaboration with Clover Biopharmaceuticals begins clinical trials #COVIDRelief #BetterTogether ...Read More
@BayerUS to donate $2.5 million to @DirectRelief and the @RedCross to help support COVID-19 initiatives across the United States #COVIDRelief #HealthcareHeroes ...Read More
@PVM_Official launches Special Edition of @JuztJellyIndia to honour doctors, nurses, policemen, security guards, delivery workers, and other frontline workers, with proceeds going to the PMCares Fund #FrontLineHeroes #HealthcareHeroes ...Read More
@GeneralMills is recognized as one of the 100 Best Corporate Citizens of 2020 by @3BLMedia for its outstanding environmental, social and governance (ESG) transparency and performance #SocialResponsibility #BetterTogether ...Read More
@amazon donates $90,000 of COVID-19 relief supplies to Ohio-based nonprofits #CommunitySupport...Read More
@discoverRB and @lysol partner with the United Negro College Fund to improve access through the creation of 100 scholarships, helping communities disproportionately impacted by the COVID-19 pandemic #CommunitySupport #BetterTogether...Read More
@KelloggCompany partners with retailer @FoodLion to fight summer hunger amid #COVID19 #BetterTogether https://t.co/Ik2GV9F93h...Read More
@KelloggCompany supports food banks in 45 countries on the front lines of COVID-19 #feedingthehungry #BetterTogether ...Read More
@StopandShop raises more than $1.3 million for hunger relief during pandemic #COVID19 #BetterTogether ...Read More
Love the new layout! So easy to read and browse.