Why the grocers should get disruptive too

There is a lot of talk of disruption across the industry, and major retailers and fmcg players have had to acknowledge that traditional business models and products are no longer enough to ensure long-term survival.

This is never more the case than in grocery, which has experienced the rise of discounters and online grocery - both causing deep-seated change. Margins for grocers continue to be squeezed given the deflation the market is seeing. It is no surprise that a number of CEOs I talk with think a lot about their business’s response to disruption.

Recently, Unilever has taken a bold move in stating that, actually, it wants to be a disruptor. The billion-dollar purchase of Dollar Shave Club is certainly a strong statement of that intent. The acquisition enables Unilever to compete with P&G, which currently dominates the razor market in North America.

But acquisitions are not only being used in order to gain market share. The big players are also offering venture capital finance to entrepreneurs who are capitalising on new ideas and trends, with a view to using this to their competitive advantage.

For example, Unilever also recently invested in technology group Olapic, which gives brand owners access to social media users’ photos of their products. The venture may appear outside the scope of Unilever’s portfolio, but it is actually strategically relevant in the long run if considered as a marketing investment.

These ventures demonstrate some real bilateral thinking by Unilever, allowing it to develop its long-term approach without overlooking the core business and established strategy.

This sort of foresight could give other established players an advantage. And those failing to take inventive approaches could find themselves at a distinct disadvantage very quickly, as technological advancements are fast-moving and consumer expectations are ever-growing.

Smaller companies tend to find it easier to innovate; to know their consumer and to quickly respond to them. Instead of watching as this leads to a loss of market share, perhaps it is time for the grocers to follow the lead of others and invest: not to respond to, but to become, disruptors.

Liz Claydon is KPMG’s UK head of consumer markets