COVID-19 has been a “black swan” event for the grocery sector, bringing to light the fragility of a globalised supply chain. We have all experienced first-hand the drastic consequences of its failures, with empty supermarket shelves and panic buying. As with all economic and social disruption, there are winners and losers. This time, one of the winners will be online, local grocery services.
Globalisation has driven very long supply chains. Consumers in rich countries got used to being able to buy meat from North America, fruit from South America or fish from Asia, any time of year.
The “bricks and mortar” supermarket model was based on regional aggregation of products by wholesalers matched with a delivery infrastructure to stores that depend on footfall. With the increased connectivity of suppliers and consumers, more intelligent procurement and distribution methods can be used. Consumers can get produce faster and fresher without so much handling or distance in between.
COVID-19 has opened up online consumption to those who had not yet made the leap, quickly accelerating the adoption of shopping for food online.
The failure of traditional supermarket brands to meet that online demand has powered forward a nascent trend of people seeking local, fresh produce, direct from suppliers with whom they can build a relationship of trust. These supply chains also support small farmers and food companies, and the local economy.
We cannot ‘unknow’ the disastrous impact of the pandemic and so this change to local sourcing is likely to be permanent. Avoiding complexity at borders, bringing fresh food from farm to table quickly, giving consumers comfort about their food products – these values will remain ingrained in the grocery business psyche.
And where disruption leads, venture capital follows. Fuse Venture Partners has invested in Market Kurly, which is at the forefront of optimised logistics with its next day delivery service, sourced directly from producers. We are actively looking to invest in innovation in Europe too, with the goal of building strong and resilient tech-enabled supply chains that can protect consumers from a repeat of this food crisis.
We expect our long-term themes of mobile first and online consumption to continue to accelerate in this environment. Certain sectors are destined not only to survive but thrive, such as digital health, home entertainment, fitness and education, delivery-based consumption and services that enable remote working.