Is it better for grocery brands to sell or save their way through the cost of living crisis? Here, David Louis, sales and marketing director, Field Sales Solutions, justifies the bolder approach.
Response to the cost of living crisis is causing a fundamental divide in field marketing at grocery retail. Two broadly different camps have emerged. One based on cost saving, the other focused on driving sales and brand presence despite the economy.
There is more than enough evidence to show that bolder brand owners with ambition are successfully capitalising by driving sales. Equally, brand support is necessarily compromised by cost cutting, and many brand owners are missing the worrying implications.
The clearest indicator of how brands are approaching the shopping crisis is their response to the challenge of maintaining stock levels in multiples, which has become a significant dilemma. Cuts to the numbers of retail staff means fixtures aren’t being consistently replenished, stock is missing from shelves, and sales are lost unless addressed directly to prevent it.
No brand owners realistically have the resources to become fulltime merchandisers. Other solutions have to be found. The option for those with an eye on cost saving is frequently to turn to syndicated services. It’s cheaper than having dedicated brand teams, can be applied when needed, and there’s no financial commitment.
Return on investment using syndication can look good in terms of results too. After sales are seen to fall in particular stores due lack of stock replenishment, a syndicated merchandise team is sent in, sales return to where they were, at least in the short term, and an ROI figure as high as 5 to 1 might be logged. It looks like a win. But actually, it’s a loss. At best what’s happened is that after a week or more of lost sales the numbers are brought back to where they were before they fell. Urgent attention is needed to break the inevitable long term cycle.
The only proven strategy for ensuring product presence in multiples is for dedicated brand teams to not only undertake merchandising themselves, but also create relationships with retail staff who can make sure the relevant brand gets promptly replenished on shelves. Brand representatives that show a willingness to help store managers by tidying fixtures, and undertaking other tasks, receive special treatment in return. In other words, brand teams generate favouritism to solve the problem, and it works. But building brand relationships instore isn’t something that happens with syndicated services.
The cost cutting vs driving sales divide does not end with maintaining shelf presence. Far from it. Investing in brand teams offers other important benefits.
One is the ability to acquire free additional shelf space in multiples. There is a myth that this doesn’t happen, but it does. And again, it comes from relationship building. Brand representatives that work positively with store managers find they can obtain permission to utilise empty gondola locations, and other free space. It happens far more often than is realised, with brands frequently paying a fraction of perceived cost for the instore presence they command.
Brands handicapped by budget restraint also miss out on the ‘Aggregation of Marginal Gains’. This is a term made famous by British cycling performance coach, Dave Brailsford, who took UK cycling from the doldrums to World domination by making incremental positive differences a continuous goal. Good brand teams achieve these type of gains to significantly raise ROI, and they do it in a variety of ways.
Aggregated benefits are created by problem solving, doing extra beyond campaign brief, improvisation and working longer to make sure tasks are completed to the fullest extent. They do this as dedicated brand professionals, and equally important is their ability to undertake accurate evaluation based on the monitoring of what works best, and in what situations. Feedback enables constant adjustments to be made to increase ROI.
And there is positive news for those on tight finance through expediency rather than principle. One way to profit from the advantages of dedicated brand teams while still working budgets as hard as possible, is to utilise the latest field marketing data techniques to accurately target and limit activity to where and when it is most needed.
For example, unlike relying on sales figures to identify where empty shelves are causing loss of sales, data can now be used to analyse thousands of individual store variables, including stock replenishment frequency. It means merchandising and relationship building can be applied before the problem arises. And because it is targeted in advance only when and where needed, activity is kept to a minimum, plus it comes with the other added benefits of using dedicated brand representatives.
It should be stated that syndicated services have their role to play in the field marketing mix, and not be dismissed. It is how they are used that counts, and committing to it as a foundation of sales strategy is a risky gambit.
Consumers are making decisions now that will dictate the futures of brands for years to come, and what’s more those decisions are coming thicker and faster than ever, and are often more radical than we have seen before. In this situation, brands need to be active in the marketplace. Those that are bold are getting good results. The idea of consolidation with the aim of picking up when the economy improves looks far from viable.