30 May 2018

The Future of Food and Grocery shopping

This article was written by Scott Bouvier and Melissa Monks. 

We recently participated in the annual Food and Grocery Australia Conference where insights into the trends that will drive and shape the future of food and grocery retailing and consumption were analysed and discussed. We heard from international thought leaders, leading market, consumer, brand and social analysts and senior executives from both retailers and suppliers.

This article provides our views on the common themes with some legal takeaways.

Trust and authenticity

Our connected, diverse and better educated consumers want sustainable healthy fresh products tailored just for them, with better transparency and traceability and prices they can trust. Consumers will be increasingly digital, global, social, mobile, visual and powerful. Products will need to innovate more than ever in an authentic transparent way. 

Trust takes a long time to build but if lost it is very expensive to retrieve. The drive to authenticity in Australia should be supported by our “world’s highest standards” misleading and deceptive conduct laws. Those laws are likely to be used by competitors, consumers and the ACCC to support those suppliers that truly invest in authenticity and attack those that take short cuts. 

While suppliers pursue the current ubiquitous “cost out and innovate more” strategy, they will need to ensure that systems and capability remain in place to support their product claims. We predict that the future will be busy for consumer products lawyers as they test and support authenticity.

Experience, convenience and innovation 

Consumers want an experience, connection and discovery, so we will see more experimental stores with increased integration with eating in and social environments (not food courts, more like marketplaces). Retailers will have restaurants with takeaway versions of the meal ready to go in the store. 

With our insatiable need for more convenience, there will be an increasing trend to “retailer assemble and consumers prepare” models (eg meal kits and box services) and better tasting ready to cook meals. Significant innovation is needed to improve the taste and freshness of ready to cook meals and suppliers will need to jealously protect their intellectual property in recipes, production processes and packaging techniques.

The future of online and the voice assistants 

Australia has a comparatively low uptake of online food and grocery shopping at about 3% of the total market. This is expected to grow substantially with increased promotion of click n collect, the advert of online focussed new entrants and the growing use of the Internet of Things within the home automating our purchasing decisions. In the home environment, brands will increasingly be at the mercy of the algorithms used by voice assistants. 

Brands will need to ensure that they clearly connect with the consumer (or otherwise pay for voice positioning?!). Brands will need to shift from owning the aisle to owning the consumer. Trademark lawyers will increasingly need to focus on the aural aspects of brands and there will be interesting legal challenges involved in differentiating between requested products and promotions.

Technology and the supply chain 

There is a deluge of technology opportunities for the sector but there will be challenges as they interface with unwieldy legacy IT systems. Block chain will become commonplace to optimise the supply chain and support authenticity claims and reduce waste. There will be increasing trends to localised ranging to meet our culturally diverse consumers, with more SKUs across different regions, so the supply chain will get more complex. 

The profit opportunities will not be with the average products but with variable products and premiumisation, provided they can be produced and supplied economically. There will need to be a massive investment in flexible systems and technology skills to stay competitive. For the lawyers there are likely to be IT disputes if consultants and suppliers don’t establish clear expectations in business transformation contracts and continuing challenges of retro-fitting law to new technology modes.

Data data data

Data will continue to be collected, monitored and matched in all dimensions and offers increasingly tailored for diverse consumers. IT and compliance systems will need to keep up and the data used responsibly and with transparency. Regulatory reforms like the new European General Data Protection Regulations (GDPR) will drive more transparency and there will need to be significant legal and compliance training to manage the risks of loss of consumer trust.

Tough retail environment 

The momentum of price deflation has slowed and the reset to everyday prices has almost bottomed out. More price stabilisation may be good news for suppliers but the retailer environment is still tough. New entrants will challenge the incumbents but the challenges presented by the Australian market will not be easy. 

Even with increased competition, it won’t be any easier for suppliers. The current review of the Grocery Code has confirmed significant improvement in retailer and supplier relationships but it will recommend changes to good faith obligations, wider retailer coverage, dispute resolution, delisting practices and price transparency demands.

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