How to stay on top of your food category
Challenging retail sales, food inflation, and focus on inventory means you need to watch your category.
With challenging retail sales, food inflation, and a focus on inventory, you need to watch your category. We could see pressure within retailers to drive private label sales, reduce SKUs and provide more opportunities for proven sales items.
To understand what is happening in your category, communicate with your customers and spend time in the stores.
Your sales determine your future
Retailers enjoyed inflated sales during the pandemic, and it is tough for them to manage a decline. When sales challenge retailers, the response is to focus more on this metric and dedicate resources to deliver the numbers.
Here are four ways consumers and retailers react to rising grocery costs:
- Consumers return to eating out, meaning fewer dollars spent at the grocery store.
- People buy less when they believe the total bill will increase. The philosophy of “I will go without it this week” impacts tonnage. They just don’t buy.
- With food inflation, consumers trade down within the category. When shoppers switch from tenderloin to top sirloin, the sales decrease because they buy a lower price per pound product.
- Retailers usually price private label products lower than national brands, so consumers will also make this switch. Retailers will also merchandise private labels more aggressively because it helps their margin, especially if they make other investments to drive sales.
These realities will occupy many conversations with your customers. Your sales performance will impact your relationships with retailers and the opportunities you have for your products. Measure your sales compared to the total sales number of your customers and, if possible, your category.
Performance relative to the category is key
You need a plan in your business to deliver the sales estimates you and your customers believe are achievable. If retail sales are down 4% year-over-year and your category is down 6%, then anything better than a 6% decline is good. If you are growing year-over-year, there is a good chance you are leading the sales battle.
Talk to your customers and try to understand how you are doing relative to the category. They might not give you the exact number, but even an indication if you are outperforming other SKUs is valuable.
Measure your sales carefully, and if you see gains – great, keep doing what you are doing. If you see it slipping, react and get it back on track. If you fail to act, you risk being delisted or having to invest even more to get sales going.
Understand when retailers are doing category reviews. This is when you will see changes in the line-up at store level.
Spend time in the stores
Consumers decide to buy in the store. It is best if you can schedule store visits in your calendar. Rotate to different retailers and, if possible, visit stores in other markets.
Here are some areas to check in on when visiting retail stores:
- Check for the execution of your plans and look at your competitors.
- Follow promotion activity, which you can do from your desk now with apps. Look for different tactics like new multi-buy retail or loyalty offers. Track the category promo activity and look for opportunities to implement trade spending as effectively as possible.
- Talk to the people in the stores. You never know what you will learn. They know what the retailer is doing and hear from consumers all the time. When they know who you are, many will be more likely to share some information about your products or the category. For example, they know if a Scene points offer makes a difference because they build the displays.
When sales are challenging, retailers look for options and to make changes. Put plans on the table and be proactive to drive sales. You want to be part of the solution, not blamed for the problem.
Article by: Peter Chapman