Grocery has always been one of the most important retail channels, keeping consumers fed and supplying them with their everyday essentials. Throughout the pandemic, the sector met big challenges when it came to stock availability and staff cuts. However, with restrictions coming to an end earlier in the year, in the last 6 months supermarkets appeared to be back to business as usual. However, could supply chain issues, inflation and new HFSS legislation be the next factors to impact the industry? Having the right support in place and planning ahead will be key for brand when facing challenges and continuing to thrive.
We spoke to Helen Sheridan, McCurrach Customer Development Director. Helen joined our business in January 2019 as part of our Executive Team and is responsible for leading Grocery, Away from Home and Convenience teams. Her extensive retail background and experience means she is primed to give us the lowdown on the Grocery sector. We asked her what has changed in the last 6 months, any trends and opportunities brands should be aware of and what we can expect to see in future.
How has the Grocery sector changed in the last 6 months and what are you seeing in store?
A lot of the current challenges aren’t actually exclusive to the Grocery sector. We’re seeing lack of product availability due to ongoing supply chain and raw ingredient shortages and heightened cost pressures such as the cost-of-living crisis. What we’re seeing across all the fascias is that availability is suffering - not as much as it was during Covid, but it certainly hasn’t recovered to pre-pandemic levels. And poor execution in Grocery is a big issue too which I think is driven by staff shortages.
Stores are still suffering with insufficient numbers of staff on the shop floor, either due to less people on the roster or absence. For example, the entry to exit staff absence rate in store used to be typically 5-10%. Now we’re seeing it up to 20% because it’s starting at a much lower base. This means we are having a much bigger impact in store than what we did beforehand. Retailers are just as receptive to our field teams' support as they were two years ago when staff shortages were more talked about.
Recently, on some of our client accounts we’ve had to change our call strategy to counter for this. Now, we are adapting the time of calls so that our field colleagues have a better chance of talking to a staff member in store. Were trying earlier shift patterns because in some categories we’re just not seeing staff being available all day, so we’ve found that the beginning or end of the day where shift changes occur are better times for our field colleagues talk to a key decision maker in stores.
We’re also seeing more examples of agreements in terms of compliance that have been made at Head office that don’t link up to what the stores list. This may be to do with the amount of category changes and accommodating SKU rationalization over the last couple of years. Some stores don’t list products where they previously did. We’re seeing this is a big cause of poor compliance and it’s an area where we can have a massive positive impact for the brands.
Are there any trends or new opportunities in Grocery that brands should be aware of?
The big thing to be aware of now is the healthy storm of HFSS in conjunction with Christmas and the World Cup. HFSS rules have changed and some have been delayed but there’ still change to come by October and brands better be ready.
There’s a lot of wariness about what the impact will be. How do HFSS affected brands do big bang execution in store, and what does this means for other brands who can capitalize on the space that the confectioners and other high saturated fat, salt and sugar brands won’t be able to anymore?
Then, at the same time of year we’ll see massive event combined with the busiest shopping time of the year. Both brands and retailers are going to need a lot of support so I’d say there are huge challenges to come, but for the brands who plan ahead there are also huge opportunities to get out in front of competitors.
So, I’d say the three things brand should watch out for (and plan for!) this year are
- HFFS challenges and opportunities
- Opportunities for big bang execution for events like the World Cup
- Christmas – planning starts now due to HFSS and world cup during the same time
Do you think there are there any other challenges brands are facing in the Grocery sector?
Cost. There is an ongoing squeeze which means that consumers need to consider where and how they spend their money. This will affect some of the premium brands even more as consumers try to save money – some may buy cheaper brands or make a switch to supermarket own brand. And it will also impact where consumers shop – stores like Aldi, Lidl and discounters may become where more people buy the bulk of their Grocery shopping.
Are there any trends you predict will emerge over the next 6 months?
Everyone I’ve spoken to on the supplier side has said they don’t think they can come out of the challenges they’ve got as quickly as they thought they could have 5-6 months ago. They thought availability issues were more of a short lived thing – post-covid, post-brexit and all the challenges around supply chain. Most of our suppliers that suffer from availability challenges don’t see the light of the end of that tunnel at the moment and don’t anticipate that happening until the end of the year.
We help brands understand what is happening in the Grocery sector and this was always typically pretty stable. For example, Sainsburys always used to be the one out of the top 4 that was deemed the most compliant and most slick in terms of its operational running. The evidence I’m seeing in my client teams is that this isn’t actually the case. Depending on the category, there is an opportunity somewhere for all the top 4 to improve. It’s an incorrect assumption to think that one retailer is better than another in the top 4.
What support do you think brands need most in Grocery now?
I think the issue is brands still need support in Grocery but they may not recognize this because they think this is a “safe” channel for them.
We’re going through a transition with some clients who didn’t think they needed Grocery support but they’re now realising the sector hasn’t recovered as well as they had thought, and in some areas is worse. Therefore, they are looking for that extra level of support again from field teams.
A couple of my clients would have prioritised other channels because they believed they had already heavily invested in their overall margin and their gross profit isn’t strong enough to justify the extra spend for a field team in the Grocery channel. However, this was based on incorrect assumptions of the benefit field teams can add in terms of execution. I can now see our clients perceptions are changing around that.
So I’d say that due to some of the issues we’ve already mentioned like staff shortages and high absence rates in stores, supply chain challenges, cost pressures to the consumer and the retailer, new legislation and even how online shopping affects the shelf – support from brand field teams to get execution and compliance right is the key to thriving in the Grocery channel right now. The real difference will be made by teams who can do this as quickly, accurately and as cost effectively as possible. And that’s where getting your team structure, call files and use of data right will set you apart…
From getting the right mix of permanent and agile teams in place, to support with delivering winning execution, our Group of Sales and Marketing agencies are ready to help your brand thrive in Grocery and every key retail sector.
Talk to us to find out more: Contact | Avidity (weareavidity.com)