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Ben Wright, managing partner at Argon & Co reflects on Ocado’s recent trial of refillable packaging for everyday staples, explaining why shifting consumer demand is putting pressure on F&B retailers to adapt. While many firms focus on short-term solutions, Ben highlights why businesses must turn their attention to strategic decisions for long-term resilience.

Last year, Ocado rolled out a new trial to offer products such as rice, pasta and laundry essentials in refillable packaging – delivering more eco-friendly options directly to the doors of its online customers. The scheme delivers a container prefilled with food or laundry items, which is then returned to the Ocado driver, cleaned and reused.

This initiative is part of a broader trend among food and beverage retailers across the globe, many of which are taking extra steps to embed sustainability into their supply chains in response to rising pressure from consumers for more environmentally conscious options, such as reduced reliance on single-use plastics.

But as F&B retailers keep up with changing consumer demand, they also face significant supply chain challenges. The Covid-19 pandemic exposed vulnerabilities in raw material availability, including an acute shortage of glass, which became both limited and expensive. This scarcity not only drove up costs, but also created business risks for firms reliant on glass packaging.

This has forced businesses to rethink their reliance on specific materials and explore their options for alternative solutions – including refillable and more circular packaging.

In response to these shifts in demand, many retailers are only looking one step ahead and applying a more short-term lens to their planning and operations. However, it’s crucial for businesses of all sizes to not only react to what is in front of them, but also take strategic decisions to ensure their long-term resilience.

Staying commercially competitive while responding to change

In the retail world, much change is being driven by personalisation, service, quality, and cost. For instance, there has been a steep rise in the number of self-service checkouts in many physical stores, spanning supermarkets, clothing shops, and more. Driven by demand to reduce wait times, cut costs, and boost convenience, the number of self-checkouts has increased from 53,000 to 80,000 over the past five years.

Knowing your customer and adapting to their needs and preferences is key. The common thread among the leading F&B retailers in staying commercially competitive is nearly always related to being adaptable and agile to consumer demand.

But remaining agile to consumer demand is easier said than done – particularly when the goalposts are often moving. There has been a burst in activity of consumers pushing retailers to incorporate sustainability into all areas of their operations.

F&B retailers are waking up to this call, with Ocado’s refillable packaging pilot serving as a prime example. Though refill schemes have previously faced backlash for being less profitable than pre-packaged goods, retailers are increasingly aware of the pressure from consumers, regulators, and the government to operate more sustainably – particularly as the climate emergency intensifies. Our recent survey found that 93% of respondents noted a growing emphasis on sustainable topics, with a third of those identifying it as mission-critical to their business.

By using reusable materials, retailers can minimise the total amount of packaging required, leading to a reduction in waste sent to landfills or recycling centres. What’s more, this practice often involves less reliance on single-use plastic, contributing to combatting the global challenge of plastic pollution. The world produces over 450 million tonnes of plastic every year, of which only 9% is recycled, according to the OECD.

Alongside the environmental advantages, refillable packaging can be strongly linked to customer loyalty. By offering convenient refill options straight to customers’ doors, retailers like Ocado encourage repeat business – enhancing brand loyalty and making it more likely that customers will return for future purchases.

Knowing what’s around the corner

As F&B retailers spin multiple plates, they must strike a balance between addressing immediate concerns and planning for the future. A crucial first step is to examine forensically the risks they face across the short, medium, and long term.

Research highlights the four key areas where businesses are struggling: managing and controlling escalating costs, finding and retaining skilled talent, forecasting and adapting to changes in customer demand, and improving supply chain visibility and raw material availability.

By rooting out the risk areas in the business, firms can then take the necessary steps to alleviate the problems and meet both current and future demands. To see real, lasting change, F&B firms must de-risk their supply chains.

Ensuring spend is returning value

Given the recent inflationary pressures, it is unsurprising that controlling costs consistently features in most business planning conversations. The F&B industry has been hit hard by inflation, with many smaller businesses struggling to maintain profitability amid reduced consumer spending and high operating costs.

As retailers’ operations mature, logistics spending naturally increases to meet rising demand. The focus should therefore be less about ‘spending less,’ and more about ensuring spend is returning value and is within control. In fact, 75% of respondents in our survey expressed a stronger commitment to investing in technologies that enhance cost control. This is where taking a long-term perspective and carefully weighing up the benefits of capital investment in technology can pay dividends.

Many logistics professionals in F&B are also exploring revised operational warehousing solutions, including automated and mechanised solutions such as robots and cobots, functional IT systems and other complementary solutions that permit either a more flexible or multi-skilled workforce. Behind each of these technologies, the rationale is to look at how cost control, supply chain visibility and management can be improved.

Bringing visibility to light

In the face of ongoing disruption in F&B manufacturing, it is all the more important for retailers to track and gain real-time insight into their supply chains to take timely and effective action.

This need has brought several technologies to the forefront. The term ‘digital twin’ has become increasingly popular as businesses invest in creating a digital replica of their value chains and run scenarios to identify what levers provide the biggest benefits.

Additionally, information management systems – such as Warehouse Management Systems (WMS) and Transport Management Systems (TMS) – have become leaner and cloud-based, making them faster to deploy alongside other core technologies. These advancements aim to provide greater certainty and de-risk the supply chain.

Making tomorrow’s business today

While the pressure of adjusting to this period of change often requires short-term fixes, F&B firms must look beyond the immediate horizon.

By balancing responsive actions with strategic, long-term planning, retailers can not only chart a course through the challenges of today, but also build the resilience needed to thrive in an uncertain future. In an industry marked by constant flux, visibility and adaptability are key to securing sustained success.