Suppliers to the UK must offer grocery retailers a unique selling proposition that embraces the requirements of today’s consumer
The UK retail market may be widely viewed as mature but there are still very real opportunities for global fresh fruit and vegetable suppliers to sell to the country’s supermarket buyers – provided they offer a point of difference.
So says Alistair Stone, fresh produce buying manager at premium UK retailer Waitrose. “Those retailers with growth in the UK have a point of difference,” he points out.
“Consumers have become more demanding about where they shop in recent years, which is starting to challenge how loyal people are to their favourite grocer.”
With today’s consumer looking for something different, growth on the UK retail market is now coming from either end of the scale at supermarkets where shoppers are presented a unique shopping experience.
Experiential chains like Waitrose and Marks and Spencer are doing well, as are the low-cost retailers, such as Aldi and Lidl, with all growing their market share.
Meanwhile, growth is stagnating at the big four supermarkets which offer similar formats – Tesco, Sainsbury’s, Morrisons and Asda – although they still account for over 60% of UK grocery retail sales.
“The big four retailers are being squeezed and therefore need to demonstrate why customers should continue to shop with them,” Stone says.
Overall, Stone claims all UK retailers must now work hard to develop loyalty and create a point of difference.
“There has been an increase in the frequency of shopping and shoppers are more promiscuous – they’re shopping up to four times a week at different stores whereas it used to be once or maybe twice a week and usually only in one or two stores.”
At the same time, online shopping and the role of technology is increasing; placing pressure on traditional store formats.
With the UK retail market set to look very different over the next two to three years, Stone says those supplying the market will have to embrace the changing relationships and demands and offer a unique selling proposition.
To tap into opportunities, he points out that fresh produce suppliers must first and foremost deliver on taste.
“It’s all about the taste,” he states. “UK customers shop with their eyes. They will pay more for better quality and they will continually go back to purchase those items.
People in the UK love food, Stone says, and they will trade up if it’s significantly and demonstrably better, and therefore worth the extra spend.
“Obviously they don’t want to eat anything that doesn’t taste good,” he notes.
“They are increasingly conscious about waste and hate throwing food away too. People are only buying what they want. So, if food doesn’t taste good on the first purchase they won’t buy it again.
Within that context, consistency is also vital, according to Stone. “For the best products, supermarket buyers will look to pay the right money, but they have to be consistently good so the consumer will buy it.”
But while UK consumers are asking for great tasting produce, Stone explains that they are still seeking value.
“Before the recession we saw ‘careless consumption’ where people bought lots of multi-buys and perhaps things they didn’t need,” he says.
“During the recession it shifted to ‘careful consumption’ and at that time the discounters rose. But following the recession, UK shopping habits have shifted to ‘considered consumption’.
“Shoppers are not buying as much as before although they are making room in their budget for quality food and casual dining.
“People will still always want value but as an experiential retailer we want consumers to have a fantastic eating experience, even with a bargain.”
Corporate social responsibility is also very high on the agenda for UK shoppers. “They are looking for less packaging, information on where produce is sourced from and how well the workers and environment are being looked after,” Stone reveals.
Furthermore, even though UK consumers are buying less, they are now purchasing fresh food up to four times a week, rather than doing one big weekly shop.
Convenience is therefore important, says Stone. “It’s not about the size of the shop but every shop has to offer convenient products and pre-packed products,” he suggests.
“UK ready meals have also changed – now the primary convenience meal is a fresh prepared meal or fresh-cut meal options such as readily chopped produce.”
In supply terms, meanwhile, Stone claims certain windows of produce supply – particularly in some stone fruit categories – that are not currently being filled in the UK and that supplying during those windows will be necessary to satisfy the year-round demand from UK consumers.
“In stonefruit, for example, there are times when the UK only has plums on the shelves. These gaps though are starting to close as we work closely with our suppliers on developments in stretching seasons,” he says.
Nonetheless, UK consumers expect to buy all types of fresh produce all year round, plus there are plenty of produce items that the UK cannot grow, such as cherries, citrus, avocados, exotics and certain apple varieties, presenting ongoing opportunity to worldwide suppliers to fill those gaps.
And while Waitrose is a strong supporter of UK-grown produce, Stone is quick to point out that local is not the be all and end all since it really comes down to which source offers top quality. “We procure from around the globe all year because shoppers expect availability of these items every day,” he states.
Despite the dominance and loyalty towards retailers’ own labels in the UK, Stone adds that clever marketing could be another way to capitalise on opportunities.
“There are a couple of brands in the UK that are working very well – Florette (salads) and Albert Bartlett (potatoes). Clever marketing will make buyers and consumers buy produce.
But some brands don’t work in the UK if they don’t offer anything different, Stone points out. And, what works in the US might not work in the UK.
“Just because you’ve got a really good product or brand in your domestic market, the odds are that in the UK or Europe there will already be someone doing a great job,” he notes.
“So, you have to understand your competitors and where the gaps are because there will always be gaps.”
By responding to demands such as these Waitrose has reaped huge success amidst a challenging UK retail landscape.
During the 12 weeks ended 4 January 2015, Waitrose maintained its strong run on the UK grocery market, according to figures from Kantar Worldpanel UK.
While market share fell for Tesco, Sainsbury’s, Asda, Morrisons and The Co-operative, Waitrose saw its sales rise by 6.6% to take its market share to 5.1%, up from 4.8% in the year-earlier period.
Importantly, the company is offering a distinct shopping experience and top quality products that are retaining consumer loyalty.