You need to be in the listing base

October 17, 2022
/ SKUBlog
/ By SKU Food

At the beginning of the year, we made a list of industry terms that we believed would be beneficial for people to understand. It is interesting for me to see how many terms we have added to the list as the weeks go by. Recently, I had the opportunity to talk to some groups and when I referred to the listing base it was clear they did not really understand the term.

Listing base is the database that includes all of the items that a retailer would have in their stores. This is a very important component of a retailer’s system as many factors are determined by the listing base. Stores and warehouses only have so much capacity, so the listing base for a specific retailer must.

Category managers (or category buyers at US based retailers) own the listing base. They decide which items will be listed with the retailer. Usually, they have a predetermined number of SKUS that can be included in their category. When an item is included in the listing base, it means the retailer has agreed to put it in the stores, find a place on the shelf and manage the retail pricing through the front end.

The listing base varies from one retailer to another

There are some items you find in almost every store. It is very difficult to differentiate the retailer’s offering with these items. Retailers have to carry them because consumers want them. The challenge for the retailer is that price is really the only way to differentiate with these items and that costs money. Heinz ketchup is what it is. Perhaps a squeeze bottle or a 100th anniversary package is a bit different but it is still Heinz ketchup. Retailers try to appeal to consumers with the second and third tier in the category. This is where the listing base starts to be unique.

Some retailers will work with a specific brand and you will see more of their items in these stores. Perhaps there is a connection or reason for the exposure. I remember at Loblaw we carried Chapmans Ice Cream (no relation!) before it was available at other stores. There was a connection between the leadership at Loblaw and Chapmans. Ice cream is a very competitive category and there was very little differentiation from store to store. Loblaw provided Chapmans with the opportunity to grow quickly and space in a lot of stores. This provided Loblaw with an opportunity to differentiate the listing base and offer consumers something available only in their stores. It was effective for quite a period of time.

Private label differentiates the listing base

When consumers decide which store to visit first the variety offered (determined by the listing base) is a factor. It is not as important as price to most shoppers but it does rank in the top 5 for many consumers. Retailers with well-developed private label programs get credit for more variety. Although the listing base might not be bigger, consumers see private label as adding to their selection.

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Winning at Retail

SKUS cost money

Every stock keeping unit (SKU, like in SKUFood) in the listing base costs money. Before a case ever enters the system they need to pay a category manager to meet with supplier, set up the item details in the system and develop a new plan o gram to put the product on the shelf. If it is a warehouse item the retailer needs to unload it, put the inventory away, pick the product for store orders and deliver it to the store. Regardless of whether it is a warehouse or direct store delivery (DSD) item they will have to find a place on the shelf, price the item in the system, put the inventory out for sale, manage best before dates and scan it at the checkout. Some of these tasks do get offloaded to suppliers to reduce the investment.

When you consider all of these tasks there is lot to invest before the item sells on unit. Yes, it is part of running a store and they will make margin when it sells.

It was interesting for me to see some retailers actually want to have fewer SKUS. I would say our philosophy when I was at Loblaw was to have the right SKUS. Sobeys and Metro would usually list more SKUS for more selection. We did have the strongest private label program at the time which allowed us to be more selective about national brands. Walmart would prefer to do more sales with a smaller listing base. With their focus on efficiencies they believe the same or greater sales with a smaller listing base is more profitable. Hard to argue unless you are the supplier trying to get a new item listed.

How do you get into the listing base?

There are different options for suppliers to get items included in the listing base. If you have the ability, you can accept the listing fees proposed and usually, they will find room for you. This can be expensive but if you have the money, it does get you to the shelf.

Additions to the listing base are enticing if your customer believes you will grow the category. Often this requires unique attributes that will bring new consumers into your category. An example would be in kombucha. When these items were first available in mainstream retail, they had a unique taste and mouth feel. Dedicated kombucha drinkers were used to this and wanted it. One more flavour extension would probably not grow the category. More likely, it would cannibalize sales from another flavour. We did see new entrants that were more appealing to a wider segment of the population which means they brought new consumers to the category. Perhaps not appealing to the dedicated kombucha drinker, but a new purchase in the category and appealing to the retailer. New consumers translates into category growth which is more sales and profit. Now you are speaking a language your customer will get excited about.

If you have any questions or require help getting into the listing base, you can always send me an email peter@skufood.com or call me at (902) 489-2900.

Peter

Nestle will remain in the plant based protein business

We have seen some companies like Maple Leaf question the investments they were making into plant base protein products. It is interesting to see Nestle announce they see opportunities and profit. I agree with their description of the category as ‘frenzied’. There was a lot of action. No doubt the items were over spaced for the sales.

Certainly, our house consumes more of these products than we did 3-5 years ago. Not every day but more often. The focus needs to shift to great taste and in my opinion stop trying to imitate animal protein. I am much more interested if it tastes good than it looks like a chicken nugget or a beef burger.

Nestlé sees green in plant-based business despite category slowdown

FCC meat products report is optimistic

Meat categories have experienced a lot of upheaval over the last few years. With the pandemic, animal health, labour and inflation there have been a lot of variables to consider. The return of food service is good news for many fo these categories.

It is interesting to see the growth in convenience products at retail. Consumers still do want to reduce cooking time and get the same eating experience. As people return to offices more and the world gets ‘busy’ again there will be more focus on these items.

2022 FCC Food Report: Exploring meat products

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