Tesco founder Jack Cohen once famously said the secret to his success was to “pile it high, sell it cheap”. While much of grocery retailing has moved on long since, that mantra has stayed alive and well in many dairy aisles of the major supermarkets. Particularly the liquid milk fixture - a notoriously high-traffic area - has remained decidedly functional in many stores.
But that is changing. After long neglecting the dairy aisle, retailers big and small are rethinking their ranging and merchandising strategies in a bid to stimulate consumer demand for higher-value dairy products, promote the category and help processors and producers get the most value out of their products.
“Making the customer’s journey through the dairy aisle as efficient as possible is important so that they aren’t hanging around in that cold aisle.”
Rich Ford, Sherlock Studio
Up until around five years ago, supermarkets were guilty of devoting very little time and resource to implementing cohesive strategies for merchandising the dairy category, says Russell Abbott, MD of marketing agency Synergis. And while some “still have a long way to go”, many have stepped up to the plate. “If you compare what the likes of Tesco are doing now to back in 2012, there have been major steps forward,” he says.
Although most supermarket chains still depend on cages to merchandise fresh milk due to their ease of use for replenishment, many have revamped the fixture with message-led fascia boards that often play on their British provenance, or support for animal welfare or the farming sector, Abbott points out.
“Innovation in the dairy fixture has been slow compared with other areas of supermarkets, and this has been down mainly to the fact it was always seen as a commoditised category,” adds Abbott. “But I think this is now starting to change, with subcategories such as dairy alternatives and dairy drinks driving innovation across the category.”
Retailers are finally realising that they need to get out of the cycle of commoditisation if they are to make more of their dairy fixtures, says Rich Ford, director of new business at retail design agency Sherlock Studio.
“In the last few years there has been an escalation in NPD, particularly through companies such as Arla, and plant-based dairy alternative product development has also accelerated through the likes of Alpro,” he says.
But there are still big challenges when it comes to merchandising dairy. “It’s a vast and crowded category, and can be both physically and visually cold, so unless care is taken it can seem bewildering, unwelcome and bland,” says Ford.
Against this backdrop, “great navigation and logical categorisation is key so you can guide people through the category” he adds. “Making the customer’s journey through the dairy aisle as efficient as possible is important so that they aren’t hanging around in that cold aisle.”
So which dairy fixtures are leading the way in the merchandising revolution? And why do our experts think they work?
Tesco and its supplier Ornua began work on a new merchandising strategy for the retailer’s own-label cheese lineup last spring as part of the wider Project Reset cull initiated by CEO Dave Lewis in 2015.
The objective was to “make things clearer and simpler” for shoppers, says Tesco hard cheese buying manager Johnny Neville, and followed extensive consumer research to categorise and segment Tesco cheese shoppers.
Tesco ended up delisting about a quarter of its own-label cheese SKUs, ditching duplicate block formats to create a much less cluttered fixture.
“Before the changes we probably had too much range, with just a mass of product on shelf,” Neville adds. “Now it is much simpler and easier to shop.”
The reduced range has been on shelves since November, and Tesco has also invested heavily in “clear, consistent and competitive” pricing across its own-label cheese to help customers “see real value in the Tesco range” says Neville.
The new-look fixture has already yielded “great results” he claims, with a 10% rise in standard-tier Cheddar sales and a growth in Tesco’s value and volume share of the overall cheese market.
Drastically cutting SKUs in what can be a “bewildering” fixture for shoppers was a wise move by Tesco, says Russell Abbott.
“If I were range planning as a retailer, I would look to limit SKUs but also try and come up with a better and a best champion in each subcategory,” he adds. “Because you want to drive value as much as possible in a fixture that is renowned as being at best break-even and at worst a loss leader.”
As part of a wider plan to develop Booths’ own-label food range, the retailer last year launched a complete refresh of its packaged cheese lineup.
“Our aim was to offer customers the best tasting, quality product at good value for money,” says Booths dairy buyer Alan Kirby. “Provenance and locality are key across all grocery categories, so for the cheese range we were committed to sourcing each cheese from the county most famously associated with that cheese.”
Kirby and the Booths own brand development team scoured the country’s best cheesemakers for the new range, which topped 60 SKUs by February 2016 and includes cheese from Joseph Heler, Wyke Farms and Dewlay.
All the cheese is packed by Dewlay, and a “huge amount of work” has gone into the packaging, Kirby adds. The aim was for the design to be as simple and bold as possible while clearly identifying the cheese and the flavour strength, with each dairy and county mentioned on pack.
The new lineup has been a huge success, with the Lancashire cheeses seeing overall value growth of 55.5%, while extra mature Cheddar value sales have grown by 174.2%.
“The fixture shows off the new premium range to good effect and is evidently working well in terms of sales,” says Russell Abbott. “The ranging and colour coding make shopping the category simple and easy. However, even more could be done to make navigating easier and to make the fixture visually more arresting, such as a better use of shelf talkers to highlight the subcategories.”
Broadway Convenience Store, Edinburgh
C-store owners Dennis and Linda Williams enlisted Müller to help “ensure they provide their customers with a relevant and compelling dairy offering” says Müller’s head of category Rebecca Oliver-Mooney.
It saw them revamp the store’s dairy fixture, with a focus on catering to daily top-up shoppers. It now makes a big play on Scottish provenance, and is situated right at the entrance as shoppers enter the store. “They rotate stock often and always ensure the shelf itself is clean, well maintained and without gaps. Availability is key.”
Indies should be leading the way in experimenting with dairy fixtures, says Hamish Renton, MD of food consultants HRA Associates, as they can trial stuff more effectively, “and measure impact more easily” than retailers with multiple stores.
Asda has overhauled its dairy aisles with new products and merchandising to promote its close connection to farmers.
A host of in-store marketing activity includes PoS promoting supplier Arla’s farmer credentials as well as region-specific marketing highlighting its commitment to
sourcing locally, most recently in Northern Ireland (see pic).
The retailer has also introduced new lines from local processors, such as Dale Farm’s protein milk and quark products in Northern Ireland. “We have always had a strong affiliation with dairy farmers and this continues today with the support we provide,” says an Asda spokeswoman.
Arla’s Farmers Milk was also launched exclusively in Asda chillers nationwide earlier this summer, and has already proved successful, the spokeswoman claims. “Arla’s Farmers Milk provides shoppers with the opportunity to directly support farmers,” she adds.
The retailer has also invested in added-value milk and launched successful new variants in the flavoured milk category, she adds.
Asda’s move to highlight its long-standing links to the farming sector makes sense, says Hamish Renton. “Asda is talking a lot about the origins of its dairy products, which is making it friends at the farmgate, and it’s a tactic that works well with shoppers.”
While Morrisons got there first with Milk for Farmers, “fast following” is often the smart thing to do, Renton adds.
“Asda got the benefit of a very similar product to Morrisons Milk for Farmers but for much less risk.”
Morrisons unveiled its For Farmers brand last autumn with the launch of Milk for Farmers after a sustained period of protests over its milk pricing strategy.
The range - which pays a portion of the rsp directly back to farmers - has proved a big success and generated more than £3.7m in extra payments to farmers since launching, despite initially being written off as a gimmick.
It has since expanded to include cheese, butter, cream and even bacon SKUs, all of which pay a premium back to farmers.
The lineup and the merchandising around it has had a direct and tangible benefit for the farmer and has resonated well with shoppers, says Rich Ford. “It gives Morrisons a real point of difference and has been a catalyst for the creation of a story at point of sale.”
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