A GROWING CHALLENGE - Inside FMCG · A GROWING CHALLENGE Increasing demands and complexity in a...

A GROWING CHALLENGE

Increasing demands and complexity in a lower-growth environment will mean that only exceptional companies will be able to sustainably achieve year-on-year growth. Inside FMCG and Real World Marketing discuss the challenges,

opportunities and capabilities needed to deliver growth.

21APR18 – www.insidefmcg.com.au 21

FINDING AND UNLOCKING GROWTH

DOUBLEDISRUPTIONAs the retail environment changes, there are opportunities for suppliers to respond. PAUL BULL

Big changes can be expected in global retail over the next nine years, according to a special

report from Walmart President/CEO Doug McMillon. From the 2017 World Economic Report Shaping the Future of Retail for Consumer Industries, his report talks of two types of changes facing the sector.

The first challenge covers improved convenience for shoppers, while the other aims at delivering better customer experi-ences.

The degree of impact should not be underestimated, with the report saying many experts and commentators have suggested the change will be consider-able and truly disruptive, changing how both retailers and suppliers approach the marketplace.

There are three main implications for suppliers in this changing landscape:1. Continual evolution.

As the nature of retail evolves, potential customers and what is important to them will evolve.

2. Embracing technologies. For suppliers as well as retailers, new technologies will reshape supply chains (think blockchain), change cost structures and redefine the nature of competition.

3. Dealing with complexity overload. One of the biggest challenges businesses face is figuring out how to balance the competing needs of delivering results in a vastly more challenging marketplace while having the resources to understand and unlock what lies ahead. It will be necessary for resources to be allocated for both tasks.For FMCG businesses, the great

challenge in this marketplace is the twin forces impacting the industry. On the one hand, businesses need to build capabilities for the ensuing decade, such as digital and analytic capability, and to attract the talent to do this. On the other hand, they need to deliver ever-stretching targets in a slowing marketplace, with a consensus outlook of 1 to 2 per cent growth.

The major reasons for the slowing growth outlook are increased competition and an over-reliance on

pricing and promotions:1. More competition. Independents

are being squeezed by the growth of Aldi, the expansion of Costco and the arrival of Amazon. For instance, Aldi is expecting to attain a 15 to 20 per cent share for suppliers with more than 600 stores by 2020.

2. Focus on price and deep discounts. Categories are now at excess of 70% sold on promotions and many categories and suppliers have seen the number of 1/2 price gondola ends more than double over the last two years.If lower growth is the likely new

reality, at least for the short term, then companies need to outperform the market through better strategies, plans and capabilities. Such capabilities can include:• Leadership growth mindset

Steering businesses through the market landscape will take exceptional leadership skills such as envisioning the future, using teams to solve problems and ensuring a relentless focus on execution and cost control.

A clear call for a more creative and imaginative leadership emerges in a Six Degrees Executive report, The Future of Leadership in Australia. The top leadership trait for the future was listed as “creativity and imagination”, at 48 per cent despite only 19 per cent of respondents feeling that leaders deliver this sufficiently today.

One survey respondent said technology disruption is changing the traits needed for leadership, including an ability to speculate about the future, and to promote strategic thinking and

For the better convenience approach, the report addresses:• The automation of roles that are not cus-

tomer-facing, such as shelf stacking, with the result of significant job cuts in retail

• The growth of online retailing increasing its share from 10 to 40 per cent of sales by 2027 (up to half of sales for some categories)

• Routine household purchases being auto-matically delivered by driverless trucks or drones

• Checkout being automatic and remote when the customer leaves the store – no more queues or scanning of items.

On the greater customer experience side, the report looks at:• Sensors and digital devices creating a

hyper-personalised shopping experience to the point of making personalised suggestions for each customer

• VR changing the in-store and in-home experience, with potential buyers able to browse virtual stock before purchase

• 3D printing enabling certain items to be made on demand, changing how custom-ers shop was well as opening markets to many smaller businesses

• The continuing trend away from large stores to smaller specialists, enabling cus-tomers to value smaller, more specialist retailers.

22 www.insidefmcg.com.au – APR1822


creativity. “Open-minded leaders will ultimately prosper within organisations in the future, as human and technological evolution continues to develop and accelerate.”

There is also a need for leaders to be nimble, says another respondent: “Leaders will need to be nimble in a rapidly changing environment. They will need to be able to create and inspire an innovative culture. The successful leader of the future will excel at nurturing this creativity and be bold in their approach to the endless opportunities available.”

In practical terms, this means leadership teams must understand the broader growth opportunities for their business – thinking from beyond their current portfolio, products and brands. Thinking holistically from a changing consumer landscape and a share of “wallet or stomach or occasion” basis to inform where businesses compete is a better planning approach. A great example is Woolworths Group CEO Brad Banducci being rightly focussed on UberEats as a serious competitive threat – he understands the battle for the “at home, family dinner” is heartland territory for supermarkets, and one they need to aggressively protect.

• Disruption for growthMany categories and businesses have grown significantly through disruption. Examples include the beer category where literally hundreds of craft-beer suppliers have emerged to create a sizeable, on-trend and highly innovative segment that is value adding to an established and mature category.

Alcohol has many other examples, be it the proliferation of gin producers, the emergence of super-premium segments across spirits or the emergence of fast-growing segments and varietals in wine.

Coffee has gone from a mainly consume-at-home category to the proliferated offering we have today. Nestle is a great example of how to disrupt yourself. While it continued with Nescafe as an important part

Open-minded leaders will ultimately prosper within organisations in the future, as human and technological evolution continues to develop and accelerate.



The creation and growth of Nespresso has created a global multibillion-dollar enterprise.

of its portfolio, the creation and growth of Nespresso has created a global multibillion-dollar enterprise, developed and run outside the core business.

The lessons: you may need to think and look beyond the boundaries of your current business for breakthrough. In doing so, you will probably need dedicated resources outside of the core business, with flexible rules on how to manufacture, launch, test and learn as well as evaluate success. Too many businesses stifle innovations by evaluating or imposing business-as-usual metrics on to what could be, over time, game-changing new products

• Integrated growth planning In an environment of increasing complexity and demands, businesses need to think, plan and execute effectively. They need to have an integrated approach to identifying opportunities and priorities. Too often, the strategy planning, budgeting process and execution, such as brand planning and customer planning, are disconnected from each other.

A common observation of many

clients in the marketplace is of businesses having too many priorities and lacking true clarity on what is most important for them. Gaining clarity on critical business priorities and communicating this throughout the organisation makes such a difference.

Ask yourself, “Are we crystal clear as a company on the critical priorities we have?” and “Is our organisation totally aligned and resourced appropriately to deliver them?” Any response below 9/10 is an opportunity.

• Collaborating for growth Delivering growth is one of the top three KPIs retailers and suppliers have in common, and as such is a fundamental objective that should sit at the heart of all plans. To engage most effectively with retailers, suppliers need to challenge themselves to ensure that all plans deliver to overall category growth as well as to the specific needs, priorities and pain points of buyers.

Category thinking allows businesses to look at the boundaries of categories and consider adjacent ones that compete for a share of wallet or demand to see if boundaries can

be stretched into new territories. Great category thinking also allows businesses to develop and execute portfolio strategies and innovation plans.

Critically, retailers now have access to great data and insights, and just like suppliers they have information on where categories are heading and what this means for the focus they should allocate to parts of their store. They are also increasingly looking at which brand, segment and category they most want shoppers to buy to satisfy a limited number of needs and occasions, ensuring the commercials are most appealing to them. In delivering these growth plans, suppliers need to understand the retailers’ view on value and the role of value in the category.

Retailers are right to focus on simplification and efficiency. There are many examples of categories that have been “reset” with 20 to 30 per cent of range being removed, which has led to increased growth. Availability and shop ability are major issues for shoppers and retailers, and range proliferation and duplication is often a key causal factor.

TIPPING POINTMany commentators think significant change is upon us… with more change in the next five years than in the past 20. In truth, the FMCG industry is always changing and innovating, but it does feel that right at this moment we are at a tipping point to major changes.

Suppliers face some incredible challenges and opportunities:• The need to do more with potentially

reduced resources.• How and where to invest – back into

insights, product development and innovation to drive growth; and/or into digital and analytics to unlock the future.

• How to build capability across the commercial organisation.As always, change represents both a

challenge and an opportunity.

Leaders will need to be nimble in a rapidly changing environment.

PAUL BULL, MD, Real World Marketing



COPING WITH

Significant change represents significant opportunity. How do businesses navigate the changing marketplace and capitalise on growth opportunities?

I nside FMCG seeks advice from Real World Marketing MD Paul Bull and Shopper Tracker MD Simon Ford...

Inside FMCG: What changes do you feel will be most dramatic over the next three years?Paul Bull: On the retail side, I believe the things we have seen in the market-place will continue and, if anything,

heat up. Aldi, Costco and Kaufland will resonate with shoppers and grow share of trade while continuing to define for shoppers what constitutes value, both from an absolute price point and also unique offers and specials.

To combat this, established retailers will need to be relentless on focusing on price messages and price perception.

Retailers that have been outperform-ing in Australia all either lead on price or have a strong price message, be it

Dan Murphy’s “We won’t be beaten on price – lowest liquor price guarantee”, Bunnings’ “Lowest prices are just the beginning – price guarantee” or Chemist Warehouses “We beat everyone’s prices – we are Australia’s cheapest chemist”. Obviously, leading retailers have clear pricing strategies and positions that resonate with customers.

I believe that more and more shop-ping will be done by smart phones and devices, whether it is researching,



buying or sharing user and product ex-perience. While suppliers are aware this is coming, I imagine most are not ready for what this change means.

I also believe we will continue to see the blurring of traditional retail chan-nels in Australia as shoppers continue to become mission- and occasion-led. A clear example will include the evolution of convenience retailers, new online delivery platforms such as UberEats, quick-service restaurants and small-for-mat supermarkets competing for top-up shops, and lunch and dinner tonight business.

Dan Murphy’s provides the most interesting example of what we could see accelerate in the FMCG sector. I see it as the best retailer in the Australian market. It has price leadership coupled with the perception of a broad range and the best shopping experience, and it is a fantastic job of omni-channel retailing with its range of delivery options and personalised customer digital market-ing.

Simon Ford: Retailers have had great success with a single-minded focus on price in the past decade. Not only has price been critical to shoppers in their choice of store and product, retailers have been able to significantly differen-tiate themselves from their competitors to gain a credible advantage. Think Coles’ “Down Down” campaign after the Global Financial Crisis, Dan Murphy’s and Chemist Warehouse’s expansion and, more recently, Woolworths’ resur-gence. But I see a move away from a sin-gle-minded focus on price over the next three years. In fact, we’re already seeing it as Coles, for example, drops “Cheap Cheap” in favour of a broader campaign, “Good things are happening”.

Our Shopper Tracker data tells us that at category level, price is still critical but less important to Australian shoppers than it was a few years ago. This is a consistent trend across all categories in grocery, liquor and convenience. Shop-pers are looking for more outside of “the basics” of price and range, particularly around health, an enjoyable shopping experience and premium options. Re-tailers are also much better at delivering “good prices”, such that shoppers tell us there is now little between them (for example, Coles and Woolworths rate closer on price image than at any time in the past eight years). They therefore have less opportunity to differentiate via a price-only strategy.

This is great news for suppliers: of

course they need to continue to help retailers be competitive on price and understand the role of price in their cat-egory, but the next three years will see even more opportunity to help retailers win by focusing beyond this, under-standing how their brands can drive this agenda and play a clear role at shelf to inspire and trade up.

Paul Bull: On the supplier side, I be-lieve the biggest differentiator will be the leadership teams of the company, whether it is main board or C suite. The starting point is how they view the mar-ketplace, where they are playing to win over the next three years, and how does the business focus on these critical pri-orities. You then need to be able to en-sure the right resources, capabilities and focus to unlock these opportunities with skill and creativity – all while ensuring a relentless focus on cost management, team engagement and retailer collabora-tion. It’s a very challenging mix.

Businesses are struggling to get this formula right. A key barrier is rede-fining the role Australia plays within the region/sector. This may sound controversial, but many businesses are working incredibly hard to deliver tar-gets based on historical performance or what the region would like the business to deliver versus a more realistic view of the marketplace and market trajectory. Businesses will need to be incredibly focused and smart to achieve some of the growth targets required. If you are a business in one of the few on-trend, high-growth segments (think A2 milk) then that may be possible, but for most businesses they may need to make bold

and decisive choices in how and where they act for growth.

Inside FMCG: Do you expect consolidation?Paul Bull: In short, yes. I think there will be fewer medium-to-large suppliers competing in categories, but more niche and differentiated companies. Large suppliers will continue to merge globally and locally to take advantage of scale, and in doing so will sell brands surplus to requirements.

The spirit of entrepreneurialism is strong in Australia, especially the desire to be in small business, and I think we will see lots of start-ups. Great examples of standout Australian success stories include Carmen’s in cereal, bars and snacks, and Cobram Estate Olive Oil maker Boundary Bend.

Social media and the internet also fundamentally change how companies compete, as it becomes increasingly easier and faster to reach consumers directly. A good example is the innova-tive cleaning company EkoWorx, which has set out to change the way people buy and use cleaning products.

I believe companies need to be differ-ent or better than their competitors, and be able to use scale advantages to win in the mainstream or be able to exploit the niche. There will be consolidation in the middle.

The difference between the winners and losers will widen. The data in our sister company, the Advantage Group, shows that the suppliers that under-stand and can bring the capabilities



retailers value are winning. Historically, this did tend to be more of the big com-panies that could use this capability, but this isn’t necessarily the case right now.

An interesting example is the liquor industry. Its top three rated companies last year were small- to medium-sized businesses and not category leaders in terms of size. In grocery, retailers often tell us they really like working with smaller, often locally owned companies that can be agile and innovative. They are keen to move at speed and accelerate the emergence of smaller, more-prof-itable opportunities within categories, which can be sometimes not so be easy with larger companies.

Simon Ford: Our data shows that rela-tively few brands are really “must stock” items, with retailers often being able to use a range of brands and offers to deliver customer needs. We have seen many examples through our 10 years of tracking data where retailers have re-duced range and subsequently improved shopper satisfaction measures and perception of range stocked. Good/bet-ter/best ranging has and will continue to consolidate to good/best. At retailer level, the same can be said for Aldi en-tering and winning via a consolidation model of smaller, more simple ranges, store footprints and choice.

The key factor is simplicity. Where consolidation brings simplicity, whether operationally in supply chain or at shelf, allowing shoppers to make a quicker decision with less frustration, suppli-ers and retailers that invest in it will

continue to win. At the core of this, each category in store and each brand in cat-egory must have a clear, precise role. If suppliers and retailers cannot articulate this, deletion is a threat.

Inside FMCG: What capabilities do suppliers need to compete effectively?Paul Bull: It’s about how you turn up for your retailer conversations – how your total business understands the retailer’s view of priorities, strategies and goals, and how the business has been able to

connect your business priorities and objectives with those of the customer into initiatives that accelerate category growth and mutual profitability. It is about anticipating what is needed and problem-solving ahead of the issue impacting your joint business.

An example is the impact UberEats could have on dinner tonight compa-nies. If companies were ahead of this they could have joined up with non-di-rect-competing businesses, collaborat-ed with retailers, commissioned joint research and formed a view on how to compete and develop macro-category plans accordingly. Sadly, this type of

More and more shopping will be done by smart phones and devices, whether it is researching, buying or sharing user and product experience.



creative thinking and collaboration does not happen as often as it could.

It is also about flexible thinking. Retailers are under constant pressure to ensure budgets are being met and to solve anything that goes wrong for customers and stores. The best suppliers have contingency plans approved and ready to go when needed.

Simon Ford: Suppliers must under-stand their retailer’s customer. Not the generic “shopper” or the channel, but the specific needs and missions of the shopper in the category in that specific banner. Take, for example, liquid stock: the Metcash and Woolworths shopper is on a far different mission and has very different triggers to purchase, and priorities driving their decision to buy. Optimal pricing, multi-buy promotions, ranging and recipe suggestions at shelf all vary significantly by banner in this example. Suppliers that do not tailor their understanding and approach in this way risk introducing the wrong strategy and losing credibility with their retail partners.

Next, suppliers must understand how to execute to the mission/need at shelf, rather than just rely generically on good price, availability and range. Shopper Tracker shows shopping is now more frequent and more mission-based rather than general pantry stocking. We see that 66 per cent of shoppers are clear on a specific occasion they are buying for, but only 23 per cent have decided on the brand they want to buy, meaning they are open to influence.

Paul Bull: We see the biggest capability as being able to rebalance the investment between price and in building brands and innovating. Short term, target-chasing has driven many businesses into lots of gap-chasing activities. Assuming we have an accurate view of market opportunities and the right priorities focused on the most attractive spaces, then we need to be able to invest to unlock these. That is about research and development, insights and marketing programs to persuade consumers to buy, as well as better digital capability. We should be repurposing pro-motional spend that is not working into quality, longer-term growth initiatives.

Beyond this, sales teams will need to be more multiskilled than ever. Sales teams need to include category and shopper in-sights capability, have the ability to inter-pret and communicate the retailer agenda to their business, and be commercially astute. Sales leads need to be able to inter-rogate category and mutual P&L results for opportunities to improve commercial

outcomes for both parties. Businesses and sales teams also need to add revenue management, supply-chain optimisation and e-commerce capability into their skill set. This clearly leads the way to business-es redesigning teams and structures and continually reviewing what resources they have versus what will be needed. I’d see this as an ongoing requirement.

Capability more broadly is also a major area of focus for many FMCG business-es. Over the past decade, capability and training budgets have mainly tended to be squeezed, and in recent conversations most businesses recognise this and are looking to re-invest in improving the capability of their people. I recall when FMCG was once a beacon industry for the best and brightest talent. This is clearly not the case now, so as individual busi-nesses and as an industry we need to do a better job of promoting our industry as a great place to work and as a fantastic place to build a rich and rewarding career.

Inside FMCG: How do you think Amazon will change the marketplace?Paul Bull: The truth is that we can all guess but none of us really know. There is plenty of speculation as to how big it will become and which companies they will most impact. I tend to agree with most of the commentary that the major impacts will be threefold: one, it will define what service is (for example, de-liveries within an hour); secondly, it can and probably will reshape what price

and value means to shoppers, just as Aldi has; and thirdly, it could be a huge category disruptor if it selects a category or key season as a primary focus.

I heard last year that in the US, 94 per cent of shoppers bought something from Amazon for Christmas in 2016, and that there are a 100 million-plus subscribers to Amazon Prime. Those figures are just astounding.

Competition is a good thing and forces companies to improve their offer and how they compete. The key question is what businesses can do better or dif-ferent to their competition. The key to this is letting the market and consumer/shopper desires direct the energies and resources businesses have, rather than trying to sell last year’s or last decade’s brand portfolio. Some great examples of how businesses have competed despite significant competitive change include Waitrose in the UK, which continues to proposer despite the growth of discount-ers and Amazon. A great supplier exam-ple is Hanes and how it has re-invigorat-ed the Bonds brands while moving to a multi-portfolio, multi-channel business with a strong direct-to-consumer com-ponent.

I tend to agree with analysts who say the sectors most exposed include mass merchandise, consumer electronics and book retailing. What Kmart has done over the past five years is impressive, and I think we are seeing some encour-aging green shoots from Big W. How-ever, I don’t think we will see the same number of total stores across the three retailers as now in three years’ time.



Simon Ford: Shoppers are changing fast. They are shopping more frequently, with smaller basket sizes, based more on a spe-cific mission (for example, dinner tonight/lunch/snack). Generic large pantry-load-ing shops were what supermarkets were set up for, but it is not the future. Retailers that meet the needs of a specific mission in real time will win. Bricks and mortar still has a role to play in this, particularly because the experiential element of this decision is key (think: I know I want something for dinner, but want to be inspired in store and decide there).

Online aligns well with this trend, however, and Amazon arguably does it better than anyone, not only because of its platform, but because it does not consider itself a retailer – it is a tech company pas-sionate about meeting customer needs. In the world of grocery, this means leading with convenience and speed rather than price, for example. In this sense, I think Amazon is slotting in to a marketplace that is already changing, and it will cer-tainly accelerate it.

Inside FMCG: Where do you think Coles and Wow will focus on growth?Paul Bull: For the better convenience approach, the report addresses the

automation of roles that are not customer-facing, such as shelf stacking. Fresh will continue to be a key battleground as there is a significant share of trade opportunity for each retailer. These are are huge categories and, importantly, they help define customer perceptions on quality.

Meals will explode as a focus. The retailers have improved the offer sig-nificantly over the past five years, and I think we are at a tipping point where the major retailers will significantly invest in what they can offer customers for to-night’s dinner and how this is accessed and delivered. UberEats makes this a fundamental business requirement. The retailers already have great food brands and platforms to engage customers on to do this – think Curtis Stone and Jamie Oliver. If I was a food company I’d be exploring this as a priority.

Main grocery shopper will continue to be their reason for being. The retailers will continue to put these needs at the heart of how they execute range, price and promotions and how they market to them. They are likely to continue to drive efficiencies from centre of store, but perhaps we will see less change in the next five years than the past five, and possibly more of the approach we have now. But within this, the supplier will need to fundamentally understand

what value means to shoppers and how to execute quality and value within their categories,

Simon Ford: Firstly, they must continue to be competitive on price, understand-ing which categories and brands should drive this, and investing appropriately to make most difference. But they will win by leading an agenda that goes beyond price, meeting the changing needs of mission-led shopping via more conve-nient and simpler stores, categories and platforms.

Within this, private label will continue to be a focus to lead on price and margin, as well as gain the loyalty of shoppers who choose their store because of its brands. This can work for suppliers as well, of course: proprietary brands and brands with a clear role in driving category growth and relevance are key.

As the competitive environment becomes more challenging, I also think retailers need to break out of their traditional channel constructs. What is beyond food and household health and beauty for Coles and Woolworths? As they invest in new platforms such as online delivery and click-and-collect, what does this open up for them in the way of new sectors and higher-margin non-food categories?



UNLOCKINGVALUE

How revenue management can help FMCG companies deliver on expectations while optimising price opportunities.

MATT FREEBURY AND JAMES TAN

For most Australian FMCG suppliers, delivering financial and strategic goals in an environment

of increased retailer value-messaging and price investment as well as shopper conditioning has been a major challenge over the past five years. Some FMCG companies are now investing in capabilities to help them unlock value for customers while optimising price opportunities.

For others, it is a struggle to deal with the retailer’s aim of delivering strong value and better prices for customers.

Long a key element of the hotel and airline industries, revenue management evolved out of the B2B environment in the US. It is a set of analytic processes to determine optimal bench price, promo-tional tactics and pack ranges across a category with the goal of best satisfying shopper demand and maximising sup-plier and retailer returns.

Consultancies like McKinsey & Co have been global leaders in this space, but the nuanced understanding of specific industries, markets and retailers has led to the development of specialist agencies, while many suppliers have taken revenue management in house. This evolution has led to the inclusion of such critical elements as an understand-

ing of shopper dynamics under differing conditions of relative price, retailer/brand support and environmental fac-tors. These insights are applied across identified product substitutes within a category.

Applying revenue-management ana-lytics is simply the fastest way to gener-ate incremental profit within a limited timeframe. Because of the shape of most FMCG company P&Ls, a 1 to 2 per cent lift in average price can often translate to double-digit profit increases.

Starting pointAn excellent starting point is to be-gin with understanding the shopper perspective. Revenue management should aim to understand how a range of related products with differing brands, prices and pack sizes perform in fulfilling common needs, and how price and range optimisation creates the most satisfaction for shoppers while deliver-ing maximum revenue for suppliers and retailers.

Importantly, many products influence the demand for similar products, where selling more or less of one product affects the sales rate of others within the same sales week, future sales periods and across retailers. A deep understand-

ing of the complementary and cannibal-istic effect of price, promotion and pack changes on a related set of products is key to developing sustainable strategy and generating mutual margin and revenue benefits.

Suppliers and retailers need to consid-er making this a priority for their joint business, taking time with analysis and being led by the results. Current practice is failing to deliver the outcomes both parties want. While revenue manage-ment is complex, it does deliver positive results for all parties.

A retailer’s viewIt’s fascinating to see both sides of the equation when it comes to promotional investment and mechanics. One thing to always remember is the sheer pace at which retailers work, and the relentless need to deliver offers for customers that ensure positive year-on-year perfor-mance on a weekly basis.

In some ways, the scale of this pro-gram is the greatest challenge retailers face. We have seen when doing pricing analytics projects that there can be large upsides for retailers and suppli-ers in optimising the programs – what products are promoted, using a specific mechanic, bundling with other category



promotions and in-store support across catalogue and display.

While retailers would love the incre-mentality available, they find it hard to run nuanced and specific programs that could even be different to that of their competitors. In many ways, the greatest obstacle is the simple, blunt approach of retailer strategies and how these execute pricing and promotions.

The right offerOne of the biggest challenges for reve-nue management is the simplistic view of retailers wanting better prices while sup-pliers want to lift average selling prices.

When we think about revenue

MATT FREEBURY, Managing Director, Real World AnalyticsJAMES TAN, Director of Consulting, Real World Marketing

management, the key is the right offer for shoppers as well as both trading partners. Really, it’s about understand-ing what customers value and to be able to offer that. This includes great everyday prices, great specials and a range of quality products that inspire shoppers to buy something that little bit special… revenue management is about understanding the right approach and the right mix for customers in each cat-egory, for each retailer and at a specific time.

In buying, you are always trying to improve commercial outcomes by unlocking the right offer for customers. In the promotions role there is greater

ability to analyse the results of activities to understand the mechanics that drive traffic, baskets and growth.

What has really opened my eyes in working with pricing analytics specialist Real World Analytics is the need for a forensic level of analysis to truly under-stand the cause-and-effect relationships across a category, and the opportunities available in getting it right.

One thing to always remember is the sheer pace at which retailers work, and the relentless need to deliver offers for customers that ensure positive year-on-year performance on a weekly basis.



A GROWING CHALLENGE - Inside FMCG · A GROWING CHALLENGE Increasing demands and complexity in a...

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