11 April 2018

Could it be time to scrap the supermarket?

Is the supermarket the only route for food brands wanting to get big, or is there another way?

Snack company Graze is the most notable online success story. It launched in 2008 as a subscription service, sending customisable snack packs of everything from soy-roasted seeds to flapjacks in the post. It grew a large subscriber base by offering free trials to the likes of university students and commuters. In 2015, it expanded to UK retailers, using the extensive customer data and reviews it had acquired to develop in-demand products. In 2017, annual sales passed £70m.

Online-only US company Brandless is garnering attention for its unusual model, despite being just a year into business. It’s selling more than 300 grocery, home and beauty products, all for $3, on its website. All products are gluten-free and fair-trade, and many are organic. CEO Tina Sharkey claims that by skipping supermarket shelves, Brandless avoids the usual mark-up on prices – typically around 70%.

Brands targeting niche audiences also have an advantage online. Tribe, which makes sports snacks and supplements, has grown a loyal following among fitness fanatics through events and partnerships with brands such as Nike and Lululemon. It sold products exclusively through its website since launching in 2016. Recently, Tribe moved into specialist retailers and is in talks with the big supermarkets. ‘I think that’s the future: selling on- and off-line,’ says founder Guy Hacking.

However, Jason Gibb says small brands selling direct to consumer is ‘largely pointless’ unless it’s the main focus.