What keeps smart and curious farmers and agriculture executives up at night? For some, not a darned thing. For others, however, the shifting sands of a chaotic marketplace are known to foster insomnia and occasional long nights of tossing and turning.

Last year was marked by notable changes to the retail landscape. The world watched as the implications of Amazon’s purchase of Whole Foods were realized. Onlookers learned that the purchase meant significantly more than the potential for lower prices for consumers. Rather, with Amazon’s purchase, it gained a slew of benefits that allowed the company to further put its stake in the ground as a player in food retail.

An expanded network of distribution hubs, strong brands, more touch points and help with the notoriously challenging problem of delivering products during the last mile were among the benefits of the acquisition. The result? The company upped the ante on e-commerce for groceries. Traditional retailers were forced to respond rapid fire, many invested heavily in their own e-commerce offerings, and a slew of new partnerships were born to help retailers compete. While e-commerce still represents but a fraction of how consumers buy food, there are ripple effects through all aspects of retail as organizations compete for an ever-more-fickle consumer.

Food stores of all stripes are changing – smaller format stores are on the rise as are stores serving specialized markets and consumers who have abandoned the weekly trip to the store in favor of more selective and frequent shopping. Traditional grocery stores, facing shrinking sales, are experimenting with new ways to drive traffic in store including creating experiences to keep customers lingering.  

Dollar stores are becoming a de facto food store in many parts of the country. Hard discounters are growing in number and share. Chain drugstores are making a play to serve some segments of the food and grocery market and farmers markets are growing. Formats are blurring, foodservice and prepared items are making their way into traditional grocery, convenience stores and other channels. Grocery distribution isn’t the only shake up in how consumers buy food. A plethora of third-party restaurant delivery services are making it easier to get food delivered anytime and anywhere, sparking experiments in foodservice like the rise in virtual restaurants.

In addition to how consumers buy, there is also changes to what they buy. Consumers are increasingly making purchases that align with their personal values. Changing demographics are seeking authenticity and transparency, and consumers are moving toward healthy living, “clean label,” natural and organic foods. And the promise of personalized nutrition and food services designed for the individual continues on the horizon. 

“Big Food” (e.g., Kellogg’s, Campbell’s, Kraft) is responding by reformulating once favored items, diversifying their portfolios and creating venture capital firms to acquire more market friendly startups.  Retailers will feel the pinch of the decline in Big Food, which subsidies about 20 percent of the supermarkets in the U.S. Newer players with annual sales under $1 billion, and often much less than that, are outperforming the big-name brands growing revenue about three times faster.

These marketplace changes showcase an undercurrent of disruption all around us, and that disruption is being driven by advances in technology and changing consumer preferences.

To understand these shifts in the marketplace and what they mean to you, consider the following questions: To what extent are we familiar with evolving retail models and the new opportunities they pose? Can we – and should we – diversify the retail channels where our products are sold? Further, how do our products fit in with today’s consumer preferences. Are any non-traditional players trying to make their way into our space? How can the private label market potentially grow our business? Is our channel strategy sufficiently diversified to weather any major shake ups that could result from Big Food money not being as heavily invested in supermarkets?

You have a greater opportunity for success if you work from a strategic plan, setting priorities based on two simple criteria:

  1. Opportunities with the highest probability of advancing your organization’s purpose and vision for success.
  2. Threats with the highest probability of standing in the way of your organization’s purpose and vision for success.

Navigating Change

With the seeds of disruption all around, it can be easy to get distracted and inadvertently allocate resources to the latest shiny objects that may or may not be to your organization’s advantage. On the flip side, organizations that are stuck in their ways may risk extinction. There is tremendous opportunity for those that embrace change as a core value, and approach the future strategically with game plan in hand and eyes wide open to navigate adjustments.

About the authors: Kerry Tucker is chief strategic counsel at Nuffer, Smith, Tucker, a strategic planning and public relations firm serving the agri-food niche and headquartered in San Diego. Teresa Siles is managing director at Nuffer, Smith, Tucker.