Disruption and the pandemic: What can traditional retailers do to survive?

During the pandemic – a period of intense turmoil and unfamiliarity – we found certainty in our supermarkets. They kept families fed throughout the pandemic and many of us discovered a new appreciation for the people who work to keep us supplied with essential groceries.

Even in lockdown – save for the few weeks of panic buying, toilet roll mania and plain flour shortages – supply chains held up and online delivery services continued to grow in popularity. Disruption and a pandemic go hand in hand, but what does this mean for traditional retailers. Can they survive?

I’ve built my career selling financial products rather than consumer goods. And while many observers might remark that food retailers are sitting in a strong position post-pandemic, it’s vital not to sit still, but to build on the momentum gathered over the last 18 months.

Academic research by the University of Reading (funded by the European Institute of Innovation and Technology) found that consumers are more trusting of the food sector because of its response to the disruption caused by the pandemic. Farmers and food retailers enjoyed a rise in their levels of public trust as “the most trusted actors in the UK food supply chain”. The research surveyed hundreds of consumers to measure their trust in various parts of the industry on an index. Pre-Covid, this figure was just 46%. The pandemic has boosted the value of the sector, driving takeover interest – with the share prices of both Sainsburys and Morrisons increasing by around 50% in the last 12 months, for example.

As we emerge from the pandemic, the end of lockdown presents the opportunity for supermarkets to explore new revenue streams and form new partnerships to help them adapt and thrive in a changing market. Corporate partnerships with trusted brands – including financial services brands – present one such strategic option.

Financial resilience is a key theme for many families that have taken a hit to their financial position, and many people are re-examining their priorities and what’s important to them in the light of the pandemic. Some of those conversations and considerations will be around future financial security, how they can protect their families and how best to plan for the unexpected.

disruption and the pandemicDisruption from the pandemic continues to stalk the sector. Amazon’s acquisition of Whole Foods was a sign of intent from the US online giant (which also owns 12% of Deliveroo) – and Morrisons has supplied Amazon Prime members with same-day food deliveries since 2016. Lockdown has also enabled a slew of challenger grocery services to take flight. From Getir, Jiffy and Weezy, to Zapp, Gorillas and Fancy, challenger brands are offering a more efficient door-to-door grocery delivery service for a generation that is less likely to prize brand loyalty over convenience and ease of use. The big supermarkets are – as you would expect – now coming to market with their own versions of these services, but competition for customer wallets will remain fierce.

New revenue streams offer opportunities and I believe that financial services should be front of mind for retailers looking to expand their offerings. Food retail and financial services have been comfortable bedfellows for some time now. Supermarkets have offered branded banking products, mortgages, investment and life insurance products to their customers, usually in partnership with an established financial services company or intermediary. As Covid-19 continues to influence consumer behaviour, food retailers are in a position to review and improve their offerings and services in these areas, perhaps by diversifying and offering a broader, whole of market range of financial products in partnership with intermediary firms to help their customers better plan for their futures.

Corporate partnerships are not unfamiliar to many food retailers, but where customer experience can be improved is in providing a whole of market choice for consumers. From the retailer’s perspective, partnering with just one provider gives consumers a very narrow option of available products. By comparison, partnering with an independent distributor will enable access to a fuller range of available products for customers, servicing a much greater range of needs. Just as the bread aisle in a supermarket offers a diversity of products, from own-brand to artisanal, from gluten-free to mass appeal products, so a whole of the market range of financial products can be offered by retailers to suit the needs of different customers.

Supermarkets have the opportunity to defend and grow their customer base and share of spend by becoming a ‘one stop shop’ for their customers’ needs, who have the opportunity to feed, clothe, insure and save for their family all in one place. The pandemic may well have created an opportunity for supermarkets to move into some of the areas traditionally dominated by high street banks – for example, Accenture’s 2020 Global Banking Study finds that the COVID-19 pandemic has eroded consumer trust in banks. According to the report, less than one-third (30%) of UK consumers trust banks to look after their long-term financial well-being, compared with 44% two years ago. This is an important point. Customers want to be sure that that organisation is going to look after them for the life of the product (and likely, well beyond!), delivering service, value and meeting its financial commitments to the customer/policyholder. We see a potential opportunity for supermarkets here to grow their financial services footprint on the back of the customer trust they’ve accumulated during the crisis.

We’re seeing lots of innovation in financial products and services. Trends such as Open Banking – which enable different parties in the financial services value chain to communicate and share data immediately and securely – should play into the hands of supermarkets, with their huge amounts of customer data and insights. Reviewing the financial product offering that supermarkets currently offer and ensuring that it’s relevant, modern and future-proofed should enable food retailers to not only tap new revenue streams that will help generate greater income but to grow the customer base, increase basket spend per customer and defend market share against rivals.


Steve Marshall, CEO of Reassured