Delivering sales with local products

February 1, 2023
/ SKUBlog
/ By Susan Sipos

As we enter 2023, each week we will explore one of our 10 trends for the new year. We approach this a bit differently as our trends are developed for suppliers in the food and beverage industry. They are based on what we learn talking to different retailers, suppliers and stakeholders in the industry.

Our fourth trend is Local products that sell. Retailers have allocated more space and resources to regional and local brands. Consumers continue to be looking for these products and retailers have responded. Now they need to see them deliver sales.

Shelf space is valuable and retailers are always under pressure to deliver sales. With the rebound of food service, food inflation and a challenging labour market to execute in stores, comparable sales or same store sales increases are tough. Retailers will be looking everywhere in the store to ensure products are selling and inventory is turning.

Local or regional products are more prevalent in many stores with retailers implementing their own unique programs. It is great to see these products on the shelf; they will only stay on the shelf if they sell.

It is the supplier’s job to deliver the sales

Getting on the shelf in retail is a major accomplishment for any brand. This is a milestone that should be celebrated every time it happens. It is also not a guarantee of success. For many the exciting rewarding work is the development, production and getting the listing. The monotonous work can be the selling.

If the selling isn’t your favourite thing or you are convinced your product is so great it will sell itself, you should consider hiring or contracting out for these services.

If you hear me speak at an event, in person or online you will hear me say “success in this industry is not just producing great products to sell; it is selling the great products you produce.

Here are some insights to ensure you have the best chance of delivering those sales.

The basics

You need a sales estimate for your products. This is a number of units per week per store or some other metric you can use to plan and measure your success. I am always an advocate of having a number that you can share with your customers. Get their input and agree on what the sales should be. Now you know what you will be measured against. You can have the greatest product or the most innovative process but if it does not meet or exceed sales it will not stay on the shelf.

Once you have a sales estimate you need to produce and deliver the products to meet or exceed those sales estimates. Service level (cases delivered/cases ordered) is your metric to measure. Most retailers will be looking for a 96% service level. Rally your organization around this and get the product to your customers on time, in full. You have a much better chance to achieve sales targets when your product is on the shelf when it needs to be.

Implement a solid distribution plan. It is great to produce the products when required, it is another thing to get them to the shelf. Many local or regional products are direct store delivery (DSD). This can be a challenge, but it has to happen. Do not wait for the store to contact you.

Develop a sales plan that includes trade spend and marketing spend. You need to invest with your customers and consumers. There are many tactics you can employ to ensure sales happen. Sitting on the shelf with a label is the least effective tactic. You need action around your product. As Norm Purdy says in our Food and Beverage Atlantic Sales & Marketing Masterclass:

1. Create awareness

2. Change attitudes

3. Influence behaviour

Focus on 3/3 on this list and you will have the best chance of meeting or exceeding those sales estimates.

Employ a dedicated resource to manage the retailers. This person should be accountable for the relationship, the sales and the execution with the customer. When Sobeys calls this person needs to be on the phone. Not available after they do 4 other things. They also need to be proactive about the relationship. No news is not good news. Communicate, share information and help improve their business.

Figure out how to get eyes and ears at retail. You need to know what is happening in the stores. This can be your own employees, reps from a broker or distributor or a third party like field agent. Regardless of your preferred choice you need to know your product is priced right, merchandised where it is supposed to be and every promotion implemented properly.

All of these components (not just 1 or 2) are critical to your success.

Build the relationship with the retailer

The retailer has put you in their store, now you need to prove you belong and build a relationship that benefits both parties. Not to be repetitive…but the cornerstone of this relationship is sales. Measure your sales regularly. This can be uplifting or depressing. No matter which feeling you get you need to measure the sales. Compare to your sales estimate. Product that is not turning as fast as they want it to turn will not stay on the shelf. Product that turns faster than they expect will get more opportunities.

If you are delivering DSD it is a lot of work but it is also very valuable information. You know exactly what is selling and when. Share the results with your contact at the retailer. If you are meeting or exceeding the estimate keep it going. If you are below, figure out what you can change and implement the change. Leaving it on the shelf with no plan will not end up well. At some point they (the retailer) will figure it out and they will decide it is done.

Measure your service level and let them know how you are doing. If you are above the target awesome. If you are below let them know what you are changing going forward to improve results.

You can also share some of the results from your sales and marketing work. They will be less excited about this because they will want you to do more trade spend, it is their nature!

Yes, they can measure all of these things but they probably will not. They are managing thousands of SKUS.

It is fantastic to see local products getting shelf space and consumers having the choice to buy these items. We will only continue to see these choices when the products sell.

If you have any questions about our SKUFood trends, you can always send me an email peter@skufood.com or call me at (902) 489-2900.

Peter

FCC Economic outlook

This week FCC produced an online session to share their recap of 2022 and outlook for 2023. There is some very valuable information here for producers and processors. It is great to compare to benchmarks and hear what is happening in our industry.

You can compare your results to some of these benchmarks and perhaps share with your customers. Retailers want to work with suppliers who are focused on the big picture and interested in improving their business.

Onions worth more than daily minimum wages in Philippines

We know food inflation has been a major issue for our industry in Canada. It has caused friction between suppliers and retailers and impacted consumers item selection. In other parts of the world, it is much more extreme.

In the attached article they report yellow onions in the Philippines have been selling for $13 USD per kg. Problems in producing regions and value of the local currency all impact these prices. Produce really does work on supply and demand.