Sainsbury’s is planning to invest in and support more small suppliers through a new hot-housing scheme to help differentiate its offer.
Rachel Eyre, appointed to the new role of head of future brands last month, has been tasked with finding “distinctive brands”, with the potential offer of listings, mentoring, free Nectar data and even equity stakes in return for exclusivity deals of up to 18 months.
Smaller brands could be used to fill space vacated by slimmed down mainstream brand offerings as Sainsbury’s continues on its journey away from “commoditised brands”, as outlined at its IGD trade briefing in June 2017.
“It’s all about investing in distinctive brands,” said Eyre, who moved across from Sainsbury’s marketing department. “We want to make sure we provide our customers with innovation and a unique shopping experience. While a lot of that can come from existing brands, we also know smaller brands and challenger brands are vital.
“Millennials are particularly interested in challenger brands, and want a more unique, more innovative range. My brief is to work out how we do that with large and small brands.”
Sainsbury’s is known in the industry for its risk aversion. “It’s quite cautious as a retailer,” said a sales consultant who had represented several startups and smaller brands. “It tends to ask small suppliers to come back once they’ve proved their credentials elsewhere, so this initiative is to be welcomed.”
A sales consultant who had advised Sainsbury’s added: “It’s more intellectual than entrepreneurial in its approach at present. It needs to loosen up a bit. Perhaps it now will.”
But Sainsbury’s believes it already has a strong record in supporting innovation, citing its early-stage support for small brands such as Mallow & Marsh and Pip & Nut. “We’re not starting from zero,” said Eyre. “It’s not about changing the way we work, but refining it and improving it. We have good relations with suppliers, and with small suppliers in particular.
“It’s part of an overarching proposition to be about destination and distinctiveness. If you’re going to be distinctive, you have to look for and create new things, rather than going to big suppliers all the time and asking them to give us their next thing.”
Sainsbury’s is the latest major corporation seeking to provide an incubator-style mentoring scheme, following initiatives such as Unilever Ventures, JLP’s JLab, PepsiCo’s Nutrition Greenhouse and, in March this year, Springboard from Kraft Heinz.
Eyres stressed the future brands initiative scheme was still in its infancy, with the possibility of investing, or providing free Nectar card data or trade investment support via Sainsbury’s in-house magazine all “in scope”.
“The KPIs we set will change. All of this is potential. It doesn’t even have a name yet. I want us to be a destination for young challenger and improve the proposition. What that might look like in terms of listings and support and investment is in scope. I would hope that in a little while there will be a stronger narrative [around what we will be offering].”
On the question of investment she added that it was as much about “investing the time as it is in money. Offering advice, formally and informally, on branding and strategy. A lot of small brands don’t have that experience.
“It’s my job to understand what matters to small, growing brands, and to build and influence and drive the right solutions, so that Sainsbury’s is a home for truly unique brands.”