Believe it or not we are 10 weeks into 2023. This is the last in our series of trends to focus on this 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 last trend is Watch your category. With challenging retail sales, food inflation and focus on inventory a lot might change. We could see pressure within retailers to drive private label sales, reduce SKUS and provide more opportunities to proven sales items. The top two priorities to understand what is happening in your category are to communicate with your customers and to spend time in the stores.
Your sales determine your future
When sales are challenging for retailers the response is to put more focus on this metric and dedicate resources to deliver the numbers. Retailers enjoyed inflated sales during the pandemic and it is tough for them to manage a decline.
1) Consumers are back to eating out which means less dollars spent at the grocery store.
2) People buy less when they believe the total bill is going to be more. The philosophy of “I will go without it this week”, impacts tonnage. They just don’t buy.
3) We also know with food inflation consumers trade down, within the category. When shoppers switch from tenderloin to top sirloin the sales decrease because they are buying a lower price per pound product.
4) Retailers usually price private label products lower than national brands so consumers will make this switch as well. Retailers will also merchandise private label more aggressively because it helps their margin, especially if they are making other investments to drive sales.
These realities will occupy a lot of conversations within your customers. We know your sales performance will impact your relationships with retailers and the opportunities you have for your products. Measure your sales compared to the total sales number of your customers and if possible your category.
Performance relative to the category is key
You need a plan in your business to deliver the sales estimates you and your customers believe are achievable. If retail sales are down 4% year over year and your category is down 6% then anything better than a 6% decline is good and if you are growing year over year, there is a good chance you are leading the sales battle.
Talk to your customers and try to get a sense of how you are doing relative to the category. They might not give you the exact number but even an indication if you are out performing other SKUS is valuable.
Measure your sales carefully and if you see gains great, keep doing what you are doing. If you see it slipping react and get it back on track. If you fail to take action, you risk being delisted or having to invest even more to get sales going.
Understand when retailers are doing category reviews. This is when you will see changes in the line-up at store level.
Spend time in the stores
Consumers make the decision to buy in the store. It is best if you can schedule store visits in your calendar. Rotate to different retailers and if possible, visit stores in other markets.
Check for the execution of your plans and look at your competitors. Follow promotion activity which you can do from your desk now with apps. Look for different tactics like new multi buy retails or loyalty offers. Track the category promo activity and look for opportunities to implement trade spend as effectively as possible.
Talk to the people in the stores. You never know what you will learn. They know what the retailer is doing and they hear from consumers all the time. When they know who you are many will be more likely to share some information about your products or the category. They know if a Scene points offer is making a difference because they build the displays.
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
Canadian grocers called to Ottawa
This week the media was full of images of 3 of the leaders of Canadian food companies being called to Ottawa to answer questions at a parliamentary committee probing prices in the food industry. Unfortunately, this appeared to be more theatre than substance. Each of the leaders was given 5 minutes to address the committee then answer questions.
I am not sure we really understand much more than we did before. Food inflation is not just a retailer issue. It is a value chain issue. People see prices in grocery stores and need someone to blame. I would like to have seen more detail on year over year margins in grocery, meat and produce. These are the 3 numbers that would explain if they are benefitting from higher prices.
A big gap was the absence of Wal Mart and Costco. These two, U.S. based businesses control close to 1/3 of the Canadian food industry. Many retailers key off Wal Mart for pricing so we know they have a huge impact on pricing.
Change comes from many places
Consumers have more impact than ever on our industry. Although PLU stickers were not on my radar as a big environmental issue but that does not mean I was right. It is interesting to explore what options are out there to PLU stickers. It is an environmental issue and it is a cost issue. Producers would probably like to eliminate the PLU stickers.
We need to figure out how to keep the accuracy of products going through the front end and find a creative solution.
Where is Peter Speaking?
De Sedulous Women Leaders
Pricing and positioning Mar 10th
Learnsphere & BCFB
Supply chain 123 Mar 28th
De Sedulous Women Leaders
Finding the perfect distributor Mar 31st
FCC Winnipeg
Getting on the shelf Apr 4th
Foodpreneur program
Getting ready for retail May 16th
De Sedulous Women Leaders
Pricing and positioning Jun 23rd
De Sedulous Women Leaders
Finding the perfect distributor Jul 14th
