Farmers must collaborate more with retail, distribution and data specialists if they want to keep the customers they won during the coronavirus lockdown, said a Norfolk supply chain expert.
Prof Andrew Fearne, of the Norwich Business School at the University of East Anglia, gave an online presentation to outline some preliminary findings from his Nuffield Farming Lecture, which has been postponed until 2021 and refocused in light of the seismic retail changes taking place during the Covid-19 pandemic.
He described the crisis as a “systemic shock” which created winners and losers as independent retailers and farm shops gained at the expense of supermarkets and food service, while accelerating established trends such as the rationalisation of product ranges and development of e-commerce.
But he said the focus is already shifting from the pandemic to the resulting recession, which would “test the resolve” of consumers who switched during lockdown.
So to compete with supermarket price cuts and the threat of well-trusted online giants entering the fresh grocery market, he said farmers must collaborate to provide a more convenient and engaging shopping experience, reduce the costs of distribution, invest in customer loyalty, and make use of the data harvested by new e-commerce systems – none of which they can do alone.
“Retention is the fundamental challenge,” said Prof Fearne. “Consumers, it seems to me, are willing to support producers and farmers, and a subset of those who have converted are willing to pay more if they are given a compelling reason to resist transgression.
“There is a rational argument for paying a little bit more to keep our local, regional and national food supply chains functioning. The extent to which people are willing to pay more for that, when furlough ends and as recession bites, we are yet to see, but the cracks are already starting to appear.
“The shift from mainstream grocery retail in supermarkets to online brings in giants who have been watching from the side. We are about to see the mother of all battles for market share when Amazon enters the fray with relish and with a scale, expertise and infrastructure that few will be able to match.
“When Amazon comes knocking on the door of their members offering them free delivery of their groceries they will have an immediate impact, and the allure of that to those millennials, who have Amazon tattooed in their wallets and in their hearts and minds because they are so good at what they do – they will be tempted to switch.
READ MORE: Cattle farmer aims to capitalise on huge lockdown demand for local beef“That was going to come. It is just going to come very quickly because of the recession. And every day there is another statement from a mainstream supermarket announcing they will not be beaten on price. The reality is that ripples through the supply chain and everybody will take a hit, including farmers.
“Farmers, therefore, must continue to work at collaboration, because it is not happening fast enough and there’s not enough of it. It needs to be horizontal and vertical.
“Farmers need to stop doing things by themselves. The ‘direct to consumer’ numbers are encouraging, but when times are tough and when push comes to shove, as lockdown is released and people return back to work, with the time it takes to go sourcing meals from multiple websites and pay the premium, you wonder if the repeat purchase will be there. Collaborating with other stakeholders in the supply chain will be needed to provide a more engaging and convenient shopping experience, and to reduce costs of distribution. And you’ve got to get into the data. That is not a capability that many small farming businesses have.
“None of that can happen by itself. Collaboration is the key and the window of opportunity is closing fast, so you cannot rest on your laurels, you have got to keep this momentum before the window slams shut on us.”
• Prof Fearne will present the full findings of his research, “Brick to Click: How will the retail revolution impact on UK farms”, at the Nuffield Farming Lecture in London in July 2021.
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