The UK Retail Market
Achieving breakthrough and
increasing your sales and distribution
We are a small company with big ideas for growth in the UK – how can we be
successful?
The good news is, it is usually easier to innovate and change direction if you are a smaller progressive
company – innovation and differentiation will always be the key to success.
The big manufacturers and retailers are like tankers – it is difficult for them to change direction.
Smaller businesses are like speedboats – they can change direction quickly.
Big manufacturers and retailers recognise the benefits of this type of business and we have seen
tankers, like Coke and Cadbury acquiring speedboats (Innocent and Green & Blacks) as part of their
innovation and growth strategies.
The UK retailers are looking to add value to developed categories – these innovative
brands have driven incremental growth by building on common trends...
Naturalness
Better ingredients
Modern technology
Delivering
better taste
Stronger personality
and brand experience
Their success was due to their clear point of difference
– in Packaging (stands out), Product (quality), and Price (which in these cases is higher)
The most compelling reason for a retailer to list you,
is if you have something different and innovative
but before you commit to the UK market, you need
to understand it and how it works………
Understanding the dynamics/rules of engagement of the UK market
•
Is your business fully committed to supplying the UK?
•
Do you have the expertise/people/systems?
•
Is the factory capable of supplying the customer? Do you have enough capacity?
•
Is the supply chain set up to meet the demands warehouse/logistics/system/forecasting/technology/production
planning/technical recall.
•
Is there an understanding of the service levels required?
•
How will customer service levels be monitored?
•
How will any issues be communicated to the customer?
The next slide shows how a typical food and drink business should function…..
Typical Company Set Up
Customer
Forecast
Production
Planning
Production
Customer
Order
Product Picked
for Delivery
Loaded onto
vehicles
Product to
Warehouse
Stock in
Warehouse
Delivered to
customer
warehouse
Do you have the personnel in your business, to deal with this set up?
P.O.D.
Check for Price
Matching
Invoice
Customer
Payment from
Customer
Debtor days
Understanding the Category/Market that you are entering
Pitching the product at the right cost price and retail price
– Is it a brand or retailer label?
Marketing Support
– Do you appreciate/understand what is going on around you, within the category?
Advertising
– What is affordable/what works best for your product/category
Promotional Activities
-
-
When is the best time to promote? Christmas/Easter/Summer?
What are the promotional implications for you, the supplier?
- Increased costs/volumes/factory capacities and
capabilities/forecasting/warehousing/logistics/packaging
Underlying costs of the activities? What are they?
Effect on your margins?
Ask the question of your business – do you fully understand the costs involved within the
category?
Don’t forget, the overall objective is to make profit!
Still up for the challenge?
• All your homework is done. You’ve answered yes to all the questions,
now which retailer should you approach. Which retailer is best
suited to you and your products.
• Please give this careful consideration. Your business maybe more
suited to convenience and independents. It is not always about the
BIG 4.
The next slide gives you an overview of the UK market….
Share of Trade
52 we data
to 20.07.13
Store Portfolio
Store Numbers
as of 20.07.13
Share of
Total Grocers
2012
2013
Small
2012
2013
£ Spend per Visit
%
Change
2012
2013
%
Change
28.2%
3.4%
86.2
85.5
0.2%
26.72
27.58
3.2%
16.4%
16.4%
4.2%
67.3
68.2
2.3%
26.49
26.77
1.1%
15.5%
15.4%
3.0%
70.4
72.6
4.2%
28.89
28.38
-1.8%
12.1%
11.9%
2.3%
62.4
62.6
1.3%
23.89
24.33
1.8%
5.5%
5.4%
2.3%
54.6
53.8
-0.4%
9.61
9.59
-0.2%
4.8%
5.1%
10.2%
25.6
26.8
6.1%
22.85
23.98
4.9%
3.4%
4.4%
34.2%
39.9
44.6
12.8%
15.97
18.07
13.1%
4.3%
3.9%
-4.5%
49.9
49.1
-0.6%
15.77
14.57
-7.6%
3.3%
3.4%
8.4%
41.9
45.5
9.5%
14.54
14.12
-2.9%
2.5%
2.5%
5.9%
42.0
43.2
3.8%
12.81
13.02
1.6%
Lifestage
Value Index
Convenience
Penetration
28.4%
Store Numbers
Total
Value
Change
%
Large
Super
Mega
(52 we 20.07.13)
PreFamily
New
Family
Maturing Established Post
Family
Family
Family
Older
Couples
Older
Singles
2455
1572
30
314
178
361
127
110
124
108
93
91
86
1120
546
47
177
152
198
119
95
95
88
107
99
103
521
0
114
73
94
240
91
127
133
135
104
83
67
510
13
28
192
229
48
80
99
76
96
100
115
102
3912
2717
928
267
0
0
67
81
67
79
103
104
156
295
7
49
196
36
7
102
110
74
85
105
113
97
67
100
96
102
94
115
90
733
274
285
162
10
2
60
37
45
57
101
135
148
762
82
680
0
0
0
58
87
79
86
86
128
106
82
106
128
142
107
74
93
SOT based on Total FMCG, Benchmark Total Grocers
% Change Penetration = % Change in actual buyers
Before you decide who you want to work
with…..
This is where the retail market is expected to
be over the next few years
Convenience, online and discount to grow fastest
These three channels will be the clear out-performers over the next five years, being
closely aligned with shoppers’ increasing desire for convenience and value. Together
they will account for over £3 in every £4 of the cash growth in the market to 2018.
43.6%
2013
38.9%
20.5%
18.2%
2018
21.0% 22.4%
5.6%
Superstores and
Hypermarkets
Store
remodelling will
be key to reviving
sales with a focus
on fresh,
foodservice and
creating a more
welcoming
experience
Channel value
change £bn
2013-2018:
+6.0
Small
supermarkets
Targeting the
mini-main
mission,
alongside
showing
relevance,
convenience and
value are key to
lifting
performance
+2.5
9.0%
Convenience
Discount
Tailored
format
rollouts and
missionspecific
ranging will
drive growth
New store
development
and a wider
and more
engaged
shopper base
will sustain
growth at both
food and high
street
discounters
+10.6
+9.1
3.9%
7.1%
Online
Flexible
fulfilment
solutions, new
market
entrants and a
better
understanding
of the online
shopper will
be key
+8.1
5.4% 4.4%
Other
Poorly
differentiated
retailers will
struggle to
compete, but
niche
specialists
could prosper
-0.2
Shopper behaviour
The next slide shows what shoppers are doing
-
How they are behaving
What they are looking out for.
You need to bear this in mind, as you prepare your plan for the
UK.
How will these shopper behaviours affect your UK strategy?
Shoppers remain defensive
In spite of more positive media coverage, shoppers remain very defensive, with reference to grocery shopping
This suggests that volumes in UK grocery will remain under pressure for some time to come
Do you think you will do less or more of the following, next 6 months (top 15 answers)?
Source: ShopperVista, IGD Research, September 2013 (fieldwork: June 2013, Top 10 items only)
Base: 1,000 main shoppers, balanced sample IGD ShopperVista
The Meeting with the Buyer
A typical buyer could be buying a 1000 different lines (sometimes across several
categories). They expect you to be the expert. You have to know your particular
category, better than they do.
In the meeting, they need to know what’s in it for them quickly - engage them
immediately.
Keep your presentation simple but impactful. Buyers are time poor.
Important points:
•
•
•
•
•
•
Your personality and that of the brand has to be very evident
Your passion for your product is pivotal
Professionalism is a given
Confidence is a must
Knowledge is king
Make them feel that they will lose out, if decide not to list you
The first meeting with the buyers has to be the best!
The Meeting with the Buyer
In your presentation, the first two slides have to grab their attention. You also need
to include:-
•
•
•
•
•
•
•
Your company structure (owner/background/who you supply at the moment).
USPs of your product – innovation, differentiation etc
Product positioning within the market place
Where does it fit on shelf?
Suggest retail price points/expected retailer margins. How much money can
they make, will it grow the category incrementally?
Marketing plans (how much are you prepared to spend to encourage consumers
to switch).
Promotional plans
Never “dis” the competition!
6 weeks later, you have a listing!
You have a
listing!!!!!
Take a moment to celebrate, then down to business – how to maintain the
listing and importantly, grow the business (above and below the line
marketing activity and support).
What to do next?
Firstly, find out
•
•
•
•
•
How many stores you will be in?
What is the retail price “likely” to be?
Exact listing date?
Exact first delivery date?
Will there be an allocation of product to stores and how much?
You then need to ensure that you keep your listing and growth.
How are we going to do this?
Above the line activity/typical communication opportunities
Retailer
In-store Radio
Merchandise
for in store
colleagues
Retailer website
advertising
6 Sheet poster
campaign and foyer
/ in store media
Retailer
magazine
In-store
Sampling
Below the line activity (promotions)
More than 50% of all food sales today are achieved through price promotions – this will be
and should be your biggest investment – you need to get this right!
riod
P1
P2
P3
P4
P5
P6
P7
P8
P9
P10
P11
P12
P13
P14
P15
P16
eeks
3
3
3
3
5
3
3
3
3
3
3
3
3
3
2
3
3
omo start in storeTue.
27-Dec
17-Jan
07-Feb
28-Feb
20-Mar
24-Apr
15-May
05-Jun
26-Jun
17-Jul
07-Aug
28-Aug
18-Sep
09-Oct
30-Oct
13-Nov
04-Dec
omo end in store M on.
16-Jan
06-Feb
27-Feb
19-Mar
23-Apr
14-May
04-Jun
25-Jun
16-Jul
06-Aug
27-Aug
17-Sep
08-Oct
29-Oct
12-Nov
03-Dec
24-Dec
om Creamy
ngles
Better
tha n 1/2
pri ce 30p
4 for £2
om Creamy 6
ack
£2.50 any 2 for £4
Rollback
to £2
£2.50 any 2 for £4
£1.38 any 2 for £2
om Favourites
SUPERMARKET DISTRIBUTION ONLY
•
4 for £2
P17
EDLP 50p
ROLLBACK £0.40
EDLP 50p
ROLLBACK £0.40
Rollback to £2
EDLP £2.50
Rollback to £2
EDLP £2.50
EDLP £1.38
Rollback to £1
EDLP £1.38
PLAN TO GET INTO MAIN ESTATE
A bespoke plan that you can deliver and is likely to be pre-agreed upon listing with the buyer – the
deeper the promotion the higher the volume, can you cope with the volume demand?
•
Promotions will have to be in line with retailer themes – also to gain discretional space (i.e: Gondola
end) this will cost you!
•
Promotions work differently with different product groups.
Managing and growing your business
• In the UK, communication is so important with the buyer.
• Monitor the sales as often as possible – each day/week.
• If your plan isn’t working, change it.
• Be working on new ideas.
• Be ahead of your competitors.
• Get into a place where you are the best supplier.
In Summary – To be successful
PEOPLE
Knowledge - Expertise - Commitment
- Have the right people in your business
PRODUCTS
Continue to innovate as innovation is key
- Packaging, products, improve taking cost out where you can but not on
quality
COMMUNICATION/
PROMOTIONS
Must be effective
- Have a plan
- Be creative with promotions
- Ensure that you are getting a return on your investments
- Bringing in new consumers
- Switching consumers to your product
PRICES
Competitive within its competitive set – not cheap!
- Don’t forget your margins – ensure that you build enough into your cost
prices, to be able to pay for any support.
Finally,
Be committed
Don’t do this tentatively – it won’t work.
And as I said in the first slide, continuous innovation and differentiation
will always be the key to a successful, sustainable business.
`