Challenger brands have benefited from the diversification of the grocery aisle in recent years, contributing 59% of FMCG market growth in the UK. However these same businesses now find themselves in a fight for survival as the unprecedented coronavirus pandemic changes the way people shop.
Supermarkets are reducing the shelf space they allocate to small brands as they focus on ‘essentials’, shoppers are flocking back to familiar big-name brands, and hospitality channels have all but dried up under lockdown conditions. This situation has led to heavily constricted cash-flows.
“It is a nerve-wracking time for the industry,” Theadora Alexander, co-founder of Young Foodies, recently told FoodNavigator. “All the challenges felt in hospitality right now are being mirrored in all their suppliers… The biggest hurdle right now is retailers, supply chains and manufacturers de-prioritising small businesses in an effort to focus on the 80-20. This is dangerous territory.”
In an effort to mitigate some of these challenges, Young Foodies is launching a new online supermarket dedicated to independent brands: Mighty Small.
The aim is to allow challenger brands who don’t have an existing e-commerce operation to unlock new opportunities online. The DTC e-commerce platform will help startups and SMEs rejuvenate sales, boost cashflow and grow categories, Young Foodies hopes.
Pivoting to online amid COVID-19 disruption
Through Mighty Small, Young Foodies wants to ‘actively educate and engage’ consumers by providing a wider and ‘more exciting’ product choice, innovative flavours and ingredient authenticity.
The concept intends to encourage shoppers to support local producers and independent businesses. This is an important area of opportunity for SMEs as they come to grips with the changing FMCG landscape.
A recent survey conducted by Young Foodies found that 47% of small businesses positively rate the prospect of pivoting to online to boost sales.
Young Foodies identified a significant hurdle, however. Individually, many start-ups are limited by technological, logistical and manpower capabilities. To overcome this, Young Foodies built an entirely new retail business ‘within days’.
According to the start-up community, Mighty Small offers brands ‘favourable commercial and operational terms’, including quick payment terms, cost-effective storage options with control over stock volumes, no product pitching or marketing plans, no onboarding delays and no minimum sale quantities.
Delivery services will launch in London next week (15 April) with a nationwide rollout to follow.
Community-driven for collective gain
Alexander explained that the concept has ‘community at its core’. “Mighty Small is not just an online supermarket, it’s the result of SMEs coming together to buy into an exciting new concept for the benefit of all,” she revealed.
Marketing of the website will be largely community-driven and referral-led, using an affiliates scheme, including a donation to the Food Cycle charity for every basket purchased.
As a community, brands are encouraged to leverage their collective millions of social media followers to promote the online proposition.
Having built the platform, Young Foodies will manage supply and facilitate all operations on brands’ behalf, from centralising shipping costs, simplifying fulfilment, and managing multiple supply chains. All picking, packing and delivery will be handled and paid for by Young Foodies.
Launch partners Volcano Coffee Works and Crosta & Mollica were among the first to sign up to Mighty Small. Craig Slatter, Business Development Manager of Italian food brand Crosta & Mollica, believes that the platform can address one of the thorny difficulties the brand is currently facing. “Mighty Small solves one of our biggest challenges which is to make our products more easily accessible online and to get stock directly to consumers who love us,” he explained.
Young Foodies is encouraging all food and beverage SMEs to reach out – whether or not they are an existing member of the Young Foodies community. “The more products listed on the website the more attractive the proposition to shoppers and the stronger the combined referral to benefit everyone.”
While SMEs are facing one of the most difficult business environments in living memory, Alexander remains optimistic for the future: “Few businesses are as agile and open to change as challengers and Young Foodies is incredibly proud to make this happen. It forms part of our wider #MakeaDifference campaign to support independent brands throughout the coronavirus crisis.”
For SMEs interested in signing up, Young Foodies can be contacted at: firstname.lastname@example.org