As well as looking at retailers’ financial results, it’s always worth looking at the results and investor relations outputs from suppliers too.

Greggs sandwich

Often, they contain some great insights into consumers, shoppers and retailers, and obviously, as a consultant, the opportunity to borrow other people’s insights and charge someone else money to see them is like manna from heaven. 

This time the supplier in question was food-to-go (FTG) specialist Greencore, shedding some light on what was an incredibly difficult first half, with sales down by a fifth and earnings plummeting.

Greencore is a massive company that is not necessarily well known to the public, as a lot of its products (FTG, sandwiches, salads, ready meals, frozen, soups, etc.) are sold as private label by retailers or under the brands of their foodservice customers.

Its sandwich business (supplying approximately 620 million sandwiches a year in case you were wondering) and other FTG products still account for the majority of sales, despite FTG revenues obviously taking a hammering thanks to the succession of lockdowns, the working from home (WFH) phenomenon, and the slowing of travel and commuting from a torrent to a trickle.

Greencore’s slide deck made for fascinating reading. One point that intrigued me was its confidence that the FTG market was already robustly rebounding.

“Many people are still buying food-to-go products even while working from home, but from different stores (supermarkets and convenience stores) in suburban locations rather than the likes of Pret in city centres”

While volumes are yet to recover their March 2020 levels, Greencore is well ahead of the first and third lockdown troughs. I was also fascinated by the very strong correlation that Greencore presented between FTG sales and public transport usage. 

This preceded two very interesting observations – one that should concern all retailers, and one that will be of particular interest to the grocery trade.

The first was that Greencore’s research shows that office workers are expecting to increase their WFH by one or two days per week, compared with pre-Covid, to an average of two to three days per week.

The implications of this for retail sectors including fashion, home, sports, electronics, office and even health and beauty have already been well-documented. 

I must confess that I was surprised by the second insight: that many people are still buying FTG products even while working from home, but they were buying them from different stores (supermarkets and convenience stores) in suburban locations rather than from the likes of c-stores and Pret etc. in city centres.

My surprise was partly due to the fact that I am tight-fisted and have always preferred to make my own lunch rather than spend £16 on a crayfish baguette, but also due to the fact that I thought lots more people were creating meals from scratch. I’m a consultant. What do I know?  

Supermarket moves

This puts supermarkets in an interesting position: they will benefit from their presence in suburban areas, but might be less excited by the prospects over the huge investments they’ve put into growing c-store estates in transport hubs and office districts.

They are also collaborating with suppliers to cater for WFH meal occasions too: just yesterday I saw a ’work from home lunches’ display from Warburtons, Walkers and Pepsi in a Sainsbury’s.

The agility with which businesses have reacted to pandemic-induced shifts in purchase and consumption has been amazing and there is more of this to come.

For instance, Pret has launched coffee and frozen croissants in retail, is soon to open its first supermarket unit in Tesco and has teamed up with MFG to open its first forecourt site.

“The line between foodservice and retail has always been a bit murky and the pandemic has rendered it virtually meaningless”

The line between foodservice and retail has always been a bit murky and the pandemic has rendered it virtually meaningless. There are more and more foodservice operators appearing in food stores. Takeaway delivery companies have become grocery ecommerce fulfilment businesses. Restaurant operators are becoming grocery brands on supermarket shelves. 

This makes Mike Coupe’s view of the grocery retail market look impressively prescient: he took a holistic view in which he saw Sainsbury’s not just competing against retail rivals like Tesco, but also against Deliveroo, McDonald’s and Wetherspoons in a daily battle to provide the calories that we collectively shovel down our throats (I’m paraphrasing here).         

This is absolutely the right view of the market to take and an approach that will lead to better-informed strategies in a food market that has never been more chaotic.