The experience of chocolate supplier Thorntons, which last week claimed that a 12.8-per-cent drop in sales in the quarter to the beginning of October was down to a change in the way retail multiples placed their orders, reinforces the importance of all suppliers gaining a better understanding of the way retail multiples operate and structuring their businesses accordingly.
That’s the view of Bridgethorne, the customer, category and shopper management specialist, reflecting on the progress of Thorntons’ strategy to move away from its own high-street shops and focus instead on its FMCG business by selling its products directly to supermarkets.
Although Thorntons’ sales to supermarkets have overtaken its high-street sales for the first time, it blamed the drop in its sales on the timing of commercial orders and said that, based on the current visibility of orders, it expected this trend to be reversed.
“If the Thorntons experience demonstrates one thing,” said Bridgethorne co-founder John Nevens, “it is the importance for suppliers to really get to grips with the way the multiples work and to ensure that they have the information, the strategies and the practical plans in place to ensure their business meets the needs of the retailer, rather than expecting things to work the other way round.”
This, said Nevens, places an onus on the supplier to gather and share with the retailer detailed insights, which can make a contribution to category planning, range reviews, shopper marketing and account management through analytics and shopper insights.
“The supplier needs to understand it is their job to demonstrate to the retailers that it is in a position to help grow a category’s total revenue by helping turn insight into action,” he continued. “This requires in-depth analysis of the market and available retailer data, using industry leading techniques and the translation of this data into insights aligned to the retailer’s growth aspirations.”
In practice, Nevens believes more suppliers need to demonstrate their ability to not only influence shoppers today, but also contribute to a discussion with retailers on their category’s future and likely areas of growth.
“We believe clients need to attract new shoppers to a category and more importantly encourage them to buy regularly, as this encourages a positive supplier-retailer relationship,” he said.
“This means suppliers looking at and developing insight-based recommendations on range, space utilisation in-store, merchandising and activation. Suppliers that achieve this have more influence with the retailer. Suppliers that fail risk a declining relationship with less influence on the category agenda. That’s what we help them to do.”
Fundamental to that process is helping suppliers understand the journey that both products and shoppers take to the point of purchase. That journey will be different, with different motivations and different priorities, whether it finishes in store, with a click-and-collect purchase, or simply made from the comfort of their own laptop. It may also be different whether it is at a convenience store, a supermarket or a hypermarket.
Nevens claims that many suppliers are not yet doing enough to understand and influence the factors that impact on a shopper’s decision to buy at the point where their products meet potential shoppers.
“Using insights on real shopper behaviour and motivations to inform category growth also helps suppliers better understand the importance of the point-of-purchase interface. Understanding shopper motivations and how to leverage them is critical for commercial success,” he concluded.
© 2014 - European Supermarket Magazine
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