Consumers make the decision to buy at the shelf - SKUFood
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Consumers make the decision to buy at the shelf

Consumers make the decision to buy at the shelf

Do I sound like a retailer? It is true that retailers would like you to spend all of your marketing dollars in the store. I am not that biased, but I think you would agree, many decisions to buy, or not to buy, are made at the shelf. People do shop with a list and many are loyal to specific brands. On the flip side go into a store and watch people shop. They will stand in front of the category and survey the choices. In the current environment where people are more focused on price and value, they might be making even more decisions at the shelf.

We will take the first 10 weeks of the year to dive into our 2024 trends. We want to provide you with as much context to determine where to focus the efforts of your business. Everyone has a limited amount of resources and dollars so it is important to consider the best return for your investments.

2024 Trends

3. Focus on the shelf

Our third trend for 2024 is to focus on the shelf. One of the most important points in our first paragraph is when we reference consumers who make the decision not to buy. To ensure this does not happen to your products put efforts into making sure you are in stock and your value proposition is communicated in a sea of sameness. With the continued explosion of small brands, many of them locally sourced, suppliers need to pay even more attention to packaging that stands out on the shelf. These three opportunities could take your sales to a new level in 2024:

  1. Your in stock position
  2. Your value proposition
  3. Your packaging

The starting point is to assess where you are at with each of these areas of your business. Once you know how you are performing then you can decide if you need to invest time, money or other resources into making improvements.

Your in stock position

When consumers make the decision to buy and your product is out of stock, it does not matter how good everything else is; you will not get the sale. To understand how you are performing in this area there are a number of things you can do.

The first thing is to get your own house in order. What is the service level you are delivering to your customers? Service level is defined as the cases you ship (on time, with the right label, to the right place) divided by the cases they order. You should be at 96% or better to keep your customers happy. If you are doing direct store delivery or working with a distributor you should measure service level orders by what should go on the shelf or what the distributor needs.

While you are getting your service level to 96% or better, get out to the stores. Audit your in stock position. Measure this over a period of time and quantify how often you are in a good position and how often your products are out of stock. If you are out of stock more than 5% of the time then you need to focus on the problem and get it fixed. This can get complicated because there are many paths your product can travel before it gets to the shelf. Work backward or forwards through the path to understand where the issues are occurring. It can be anywhere from when you drop the product to a store, distributor or retailer’s warehouse to the actual store. Often, it can be more than one issue. You need to continue to monitor the results and it is a bit like playing Whack a mole…you solve one problem and another will pop up.

If you have people working in your business these can be projects they take on. It can be a great education in how things can go wrong and how to get them fixed.

Your value proposition

We know there is a lot of focus on the price of food. We know consumers are looking at the value products deliver and how they compare in the category. When we talk about value it is worth noting we are not only talking about the retail price. When I was at Loblaw, we would define value as the combination of price and quality. You do not always have to be the cheapest, but you do need to deliver great value.

Your value proposition should be for your products, but you also must compare to the other items in your category. Visit the store and compare the attributes, features and most importantly benefits of your products to the items you compete against.

Be objective and if you find that difficult, find someone who can be objective. How do you stack up? The value proposition you have on the shelf needs to be compelling enough for consumers to make the decision to buy.

You might find when you do the comparison, there are certain attributes about your product that are just not communicated very well. Make the change and get credit for the great product you have.

In times of inflation and focus on price you should pay close attention to promotion activity in the category. Signage sells and your competition might be investing more in the retailer’s in-store special program. Although you might not want to spend more you might have to re-allocate some money to play the game. If your product can compete at regular retail but your competition are offering .50 off 4/10 weeks you will struggle to generate the sales you need.

Your packaging

If you have not done it recently, consider putting your packaging through an audit to judge its effectiveness. Norm Purdy (norman.purdy@pcxadvisors.com) who did a guest column for us in 2023 has a great process to review your packaging.

Packaging is complex and it is probably one the most expensive components of your marketing budget. I encourage people to add up the costs of packaging, not just the one time design and creation fees.

There is no doubt it is a big project to develop new packaging. You need to consider so many factors such as protecting the product through the supply chain, meeting regulatory requirements for (font size, Health Canada and language), how and where it will be merchandised, meeting the requirements of your customers, bar codes and not to mention sell the product.

If your packaging is not performing, you might be left with no choice but to go down this path.

Focus on the shelf

Consumers are making a lot of decisions in the store, at the shelf. To maximize the opportunity you have in 2024 get out to the stores and see how you compare in the category!

Peter

Where is Peter Speaking?

Loblaw discounts dominate the news

This is a great indication how focused people are on the price of food.

It is also ridiculous we have members of parliament and so called industry experts claiming this is collusion. I am not a lawyer, but going into a competitor’s store to check their policy and making a strategic decision to change your own policy is not collusion. If you get together and decide we should all change it to 20% off, to me that is collusion. Retailers check competitive prices every week and make a lot of decisions based off these price checks.

People need to understand it is not Loblaw’s mandate or objective to offer low food prices. Loblaw and the other retailers are trying to compete to generate the highest possible sales with the best margin and generate a return for their shareholders. If people don’t like the change, shop somewhere else! We do need more choices but there are options.

We are excited to be working on this program with Food and Beverage Manitoba. Retailer's local programs are great opportunities for processors who can take advantage of their space on the shelf. This virtual and in-person program will help processors implement processes to maximize the opportunity they get in the store.

Really excited to have the opportunity to share the stage with Cathline James from Wise Bites and Lindsay O’Donnell from Piquant Marketing. Cathline will be sharing her real life experiences gained from developing and implementing strategies to get Wise Bites products off the shelf. Lindsay has a great process to help brand owners understand their ‘why’. I get to share insights on how to get your product on the shelf. A great day for food businesses in B.C. Thanks to FCC and BC Food & Beverage for hosting the event!

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