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What does the 2021 retail outlook mean for food brands?

If you’re following the food industry, you’ve probably seen your share of predictions and trends for 2021. It’s a year we’re all eager to understand, as COVID-19 has brought both temporary disruptions and long-term transformation to the retail market. But as a growing food brand, what does the 2021 outlook actually mean for your business? And more importantly, what can you do about it? Here, we’ll cover five of the most talked-about trends and how to take advantage of them in the year ahead.

1. Category reassignments are coming

COVID-19 caused one of the most dramatic shifts in consumer behavior we’ve ever seen. As a result, some grocery categories have become less relevant, while others previously considered niche are now booming. SKU rationalization will call for adding, removing, or consolidating products and categories based on 2020 patterns. As retail buyers plan for the year ahead, one question looms large: which products are still worth having on the shelves? 

In response, every brand will need to prove they’re worth the shelf space. Prepare by showing strong metrics on distribution (that you’re in front of the right customers) and velocity (that your product is moving off the shelves). Business insights solutions can help you unlock this data and tell a compelling story to buyers, so you can gain and keep shelf space this year.

2. Expect acquisitions 

On the supplier side, shifts in the industry have impacted how big brands will approach their M&A strategy in 2021. With extra cash on hand after last year’s sales boom, these companies will shoot for further growth by investing in emerging products. Opting for smaller, trendier brands allows them to hop onto new consumer trends without placing a big bet. They can leverage relationships with major retailers to take natural food brands into mainstream channels like Walmart or Costco, for example.

Want to tee yourself up for an acquisition? Start by showing promising growth numbers. Running a data-driven organization will help brands realize areas for growth, and do so at a pace noticeable to larger suppliers. Having a better data game can also help you demonstrate a more efficient (read: profitable) business, which will only make you more attractive for acquisition.

3. Consumer trends are clear

Consumer behavior changed in significant ways last year, and some of the bigger trends are expected to stay beyond the pandemic. These include:

  • Health and wellness: immunity boosting products, superfood ingredients, and better-for-you alternatives have hit the mainstream
  • Plant based eating: From milk to meat replacement, plant-based everything is flourishing
  • Convenience: As consumers grow weary of home cooking and restaurants reopen slowly, retailers will promote easy-to-fix and prepared meals 

Whatever the product, brands can build a strong marketing strategy around these trends. Put topics important to consumers in social media messaging, showcase relevant ingredients, partner with like-minded brands in trending categories, and suggest relevant recipes for shoppers. If you’re in one of these categories, you have an even bigger opportunity: find out where they’re growing fastest and prepare a strong case to buyers on why your product, among so many emerging brands, will succeed on the shelves.

To better serve shoppers, expect e-commerce to allow filtering by ingredient, diet, and other priorities. Big-name retailers like Walmart and Target will likely go the way of Thrive Market, which has already tailored discovery toward these categories. Think about how you fit into their filters, and work with online retailers so you can be appropriately surfaced (we’ll talk more about e-commerce next).

4. E-Commerce is here to stay

We know e-commerce is a big priority for retailers this year, but there are also important opportunities for food brands online. Those that leverage e-commerce to bolster brick and mortar sales will succeed in 2021 and beyond.

Just like retailers, food brands must diversify their channel strategy. Where it may not have made sense before, now might be the time to build out a direct-to-consumer offering. You may also want to build partnerships with online e-commerce, grocery subscription, or delivery services. That said, don’t just add your traditional grocery store items online -- you’ll want to tailor pricing and packaging to the opportunity and economics of the e-commerce channel.

Major brick-and-mortar retailers are planning to enhance and optimize the online “click-and-pick” experience. This means that managing your digital shelf will become just as important as your physical shelf. If your brand doesn't show up in the right search terms, or is somehow obscured from prominent view, your growth in click-and-pick will be hindered. Keep an eye on this, and advocate to be suggested or ranked in the relevant locations. If you have data on complements and substitutes  for your products, this will help your case.

5. Transparency matters

The pandemic heightened concerns about food safety, with six in 10 consumers interested in knowing more about where their food comes from and how it gets to them. Demand for transparency goes hand in hand with sustainability, which consumers increasingly expect brands to prioritize not as an added benefit, but as their way of doing business.

The first step to meeting safety and sustainability goals -- and to communicating them -- is to gain transparency yourself. Data sharing between retailers, distributors, and food suppliers is an important first step. Tools are now available that help you source sustainable products or track and reduce food waste. Technological advances from invisible bar codes to blockchain are also on the horizon to improve transparency across the supply chain.

Once you have a clear picture, you’ll need to communicate your story to both buyers and consumers. Educate them on your responsible practices with reports, using data and visualizations to back up your claims. A brand that has done this well is Field Roast, which announced last year that it has become fully carbon neutral.

Technology is here to help

More change may be ahead for the retail industry in 2021, but much of it is for the better. Food brands that seize opportunities in the changing landscape will see not just short-term gains, but sustainable wins and lasting consumer loyalty. Central to this challenge is data, which can be used to improve your supply chain, showcase your strengths, and market in an increasingly digital-first landscape. Among its other changes, 2020 saw an advancement of industry-focused technology, with the emergence of user-friendly tools to help food suppliers unlock insights into their business like never before.

Crisp leverages the power of the cloud to help food brands gain critical insights, seize new opportunities, and skyrocket profitability. Reach out to us for a demo of our business insights dashboard.

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