One in three food businesses have already sought to alter their route to market, 36% have leveraged new technologies, and 30% have sought new service providers or customers. That is according to a survey conducted by Grant Thornton’s Agri-Food team in May 2020.
In addition, nearly half of all businesses surveyed have examined their business strategy, and almost one quarter of businesses have already pivoted their business model.
The report reveals that the overarching positive impact of Covid-19 on the food industry has related to the adoption of technology across all stakeholders.
Over a third of respondents identified the increased use of technology as a positive impact from the Covid-19 pandemic. While the short-term benefits of this are already being realised, it is also felt that businesses will continue to benefit in the medium and long term.
Improved market outlook
For almost 20% of survey respondents, the market outlook has improved because of Covid-19. Interestingly, of the 20% who indicated more market optimism, 70% had forecast a decline in revenue for 2020. For these businesses, although revenue is declining, they still feel that Covid-19 will have a positive impact.
The report states that there may be many factors contributing to this viewpoint. Renegotiated terms of business may provide a greater long-term opportunity, changing consumer behaviours may result in increased product demand, business model agility may create new customers, and leveraging technology may yield efficiencies for some businesses.
Food industry resilience
“The food industry has shown great resilience to recover from initial Covid-19 shockwaves,” said Padraig Ryan, director in Grant Thornton’s business consulting team, who was speaking at the launch of the report. “Almost instantaneously, customer demands, and business operations changed to meet global and national market changes. Unsurprisingly, the industry has placed a real focus on curtailing costs and driving increased revenues, and where possible increased margins.
“Logistics and supply chain costs have risen significantly during this period. The industry has sought to offset new additional expenses by reviewing financial and commercial arrangements and implementing cost cutting and lean measures within their businesses. These practices are coinciding with a focus on capitalising on new consumer behaviours and market opportunities to grow revenue.”
The report says that businesses need to assess their strategic options to determine what changes should be retained and how elements of the organisation may need to pivot back as society returns to normal.
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