Could some of the clues to FMCG's future lie in the past?
Many speculate about which new innovations will make our future work lives easier. It's clear that lessons need to be learned, among them:
• Remote workers don't just play sit in the garden all day
• Companies that have invested in their culture to ensure a happy and engaged workforce are better placed than those that haven't
• A lack of a Direct to Consumer (D2C) channel can be a fatal blow
The final point has been the making and breaking of some companies. Retail News quotes a U.K Courier Specialist:
ParcelHero’s head of consumer research, David Jinks, said: “In the last few years, many specialist UK brands have emerged, selling their products directly to customers. From Abel & Cole, Simply Cook and Riverford, to Made.com, Bloom & Wild and Birchbox, D2C businesses are selling everything from food to flowers and furniture
So far, COVID-19 has pushed many businesses over the edge. Debenhams and Carluccio's have called in the administrators and household stalwarts like Mothercare seem to be on the way out. How much difference has a reliable D2C channel made and what does the future hold?
Online grocery share in U.K was 6% (highest in Europe) at the end of 2019. IRI forecast it to be around 8% by the end of 2020, second only to France. IRI predicts significant French changes after their survey found the top concern of 83% of French shoppers was to "Minimise human contact and do my shopping quickly".
Of the metrics that shopper marketers regularly peruse, frequency of shop is going to be on the wane. Those that stay loyal to supermarket shopping now prefer to go big and go home-ensuring they can avoid any non-family members as much as possible.
Boardrooms everywhere will be making sure that their online taxonomy looks great on grocers' sites but will also be making sure that their backburner plans of having 'some kind of website shop' are expedited, sharpish.
Putting the future to one side, sometimes what can seem like an anachronism can be given new life as consumer habits change. The Great British Bake Off has been the most popular show on T.V for time immemorial. This followed a period where it seemed like baking was what your Nan did (in my Nan's case, particularly dangerously). Similarly, in 2012, Dairy Crest explained that in 1975, 94% of milk was put into glass bottles and much of it was delivered by way of a milk float. In 2012 that figure was 4%. The writing seemed to be on the wall for the milkfloat.
The general public had loved the milk man in an age where he was an important figure in the community: he'd bring you milk to your home every day and you only needed to put a note in yesterday's bottle to modify your order (no basket amending and re-checking out required). This gregarious, whistling D2C pioneer could service your breakfast needs and much else besides as Father Ted aficionados will attest in fondly recalling Craggy Island's legendary Pat Mustard (the picture quality is not ideal but you get the idea).
It was stated in the earlier article that if you showed the children of 2012 a milk bottle, most of them wouldn't know what it was. In December of 2015, Muller bought Dairy Crest and with it Dairy Crest's Milk and More home delivery service. By this time it delivered staples along with milk to a declining number of loyal households in the U.K.
By April 2016 Muller announced that it had plans to invest in Milk and More, seeing the value of a route to market that by-passed the grocers and enabled product to get directly to consumers. In February 2018, then CEO Patrick Muller announced that Milk and More would be expanding with the addition of green scooters to aid deliveries. In April 2019, the green expansion continued, leading Muller to later state that they had the largest EV fleet in the country.
Fast forward to now and Milk and More can barely keep up with their demand. When people were faced with scenes of queuing round the block to find shops bereft of many staples, could the timing have been any better-suited for a company offering daily food staples to their houses early in the morning?
Milk and More's website calmly and politely points out that due to the surge in demand they cannot guarantee that the milkmen and women will be able to deliver within a certain time window (for obvious reasons) but that they will get the delivery to them on the allotted day. As members of the public were setting their alarms for midnight to try to arrange a limited grocery delivery for three weeks in the future, this could reasonably be termed as industry-leading service.
At one point, new signs ups were put on hold to cope with the surge in demand. And it's not just dairy essentials either. Fruit and veg, bread, cakes, artisanal offerings and even vegan delights are on the menu.
The point is, revolution is not always needed. The milkman service, such as it was, was never going to survive in the face of 4 points for 80p at the supermarket. But there's no need to throw the baby out with the bathwater. Any company that can deliver products directly to the consumer at a sensible cost-to-serve can survive most disasters if it can evolve along with the needs of its customer base. We've seen what happens when they don't and sadly, we're going to see many more.
(In the interests of full disclosure, I used to work for Dairy Crest and briefly for Muller after the acquisition. Hopefully it is clear that this is neither a sponsored article nor have I disclosed anything here that wasn't in the public domain.)