What is going on in the high street? Only last week, it seems, suppliers were being told to reduce salt and sugar and take out hydrogenated fats. NAFNAC – No Artificial Flavours and No Artificial Colours – was the acronym of the moment. But now health and quality are in the back seat with lowest price the prize retailers are chasing.
I have been hearing from different sources that a catalogue of exercises will be implemented to extend retailers’ value ranges at the expense of more premium products. As the CEO of Petty Wood, one of the country’s oldest sales, marketing and distribution companies, I was concerned. After all, our strapline is ‘For Brands of Distinction’.
Napoleon described us as a nation of shopkeepers. Well, we appear to be losing our natural retail skill of offering products for sale that customers want to buy and moving to a position of dictating what goes into baskets by restricting choice. I am not in denial about the current economic climate. I have been here before in 1991 when I was a retail buyer.
Back then it was not all about subprime, plunging bank profitability and credit crunch. It was the ERM, a lack of confidence in sterling and mortgages at 14.5%. I do understand the initial thought process that economic downturn equals consumers wanting more value lines and fewer premium products. However, the reality is you cannot apply one-solution-fits-all across the retail landscape.
We already have a segmented retail offer across store groups in the UK. We have even had segmentation within individual retailers since the introduction of top tiers such as Taste the Difference and Finest and, at the other end of the scale, own-label value products. What this hierarchy gives is choice, and we need to ensure we continue to offer choice and not fall into the trap of becoming ‘nanny’ retailers. It is still possible to reach paralysis by analysis and we must ensure we get a true consumer trend-led picture from data and not the self-fulfilling result of cataloguing exercises.
Value in any tier is a great message but is only one of the levers to help drive sales. Before any headlong dive into what I will call “choice restriction” I would like to see the resurgence of tools such as DPP (direct product profitability). There was a time when DPP was king; I would even suggest it became too controlling in the allocation of space, frozen footage against ambient and cold chain against both. What DPP did give us was a tool to measure allocation of space and understand the return we made by item and shelf footage. Other systems superseded DPP but they hold little sway under the current retail price point spotlight. If choice is removed and consumers are taken down the value route, it will result in smaller baskets and reduced spend.
People are dealing with tougher economic times in their own way. Many have adopted a debit/credit mentality, watching their expenditure during the week, but splashing out at the weekend. They are also choosing to eat in rather than out. So what does this all mean? Value is important to consumers but so is choice. The challenge is for brand principals to communicate the values that quantify, even justify, their premium price. There is enough room on the fixture at both ends of the price spectrum to meet the varied demands of today’s shoppers.
Mike Hogg is CEO of Petty Wood.
I have been hearing from different sources that a catalogue of exercises will be implemented to extend retailers’ value ranges at the expense of more premium products. As the CEO of Petty Wood, one of the country’s oldest sales, marketing and distribution companies, I was concerned. After all, our strapline is ‘For Brands of Distinction’.
Napoleon described us as a nation of shopkeepers. Well, we appear to be losing our natural retail skill of offering products for sale that customers want to buy and moving to a position of dictating what goes into baskets by restricting choice. I am not in denial about the current economic climate. I have been here before in 1991 when I was a retail buyer.
Back then it was not all about subprime, plunging bank profitability and credit crunch. It was the ERM, a lack of confidence in sterling and mortgages at 14.5%. I do understand the initial thought process that economic downturn equals consumers wanting more value lines and fewer premium products. However, the reality is you cannot apply one-solution-fits-all across the retail landscape.
We already have a segmented retail offer across store groups in the UK. We have even had segmentation within individual retailers since the introduction of top tiers such as Taste the Difference and Finest and, at the other end of the scale, own-label value products. What this hierarchy gives is choice, and we need to ensure we continue to offer choice and not fall into the trap of becoming ‘nanny’ retailers. It is still possible to reach paralysis by analysis and we must ensure we get a true consumer trend-led picture from data and not the self-fulfilling result of cataloguing exercises.
Value in any tier is a great message but is only one of the levers to help drive sales. Before any headlong dive into what I will call “choice restriction” I would like to see the resurgence of tools such as DPP (direct product profitability). There was a time when DPP was king; I would even suggest it became too controlling in the allocation of space, frozen footage against ambient and cold chain against both. What DPP did give us was a tool to measure allocation of space and understand the return we made by item and shelf footage. Other systems superseded DPP but they hold little sway under the current retail price point spotlight. If choice is removed and consumers are taken down the value route, it will result in smaller baskets and reduced spend.
People are dealing with tougher economic times in their own way. Many have adopted a debit/credit mentality, watching their expenditure during the week, but splashing out at the weekend. They are also choosing to eat in rather than out. So what does this all mean? Value is important to consumers but so is choice. The challenge is for brand principals to communicate the values that quantify, even justify, their premium price. There is enough room on the fixture at both ends of the price spectrum to meet the varied demands of today’s shoppers.
Mike Hogg is CEO of Petty Wood.
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