The past three years have been the toughest in over 30 years for Australia’s FMCG sector, with only 2-3 per cent industry growth year-on-year. This was the message delivered at the recent Australian Food and Grocery Council (AFGC) conference.
With large overseas discount supermarkets now accounting for 12 per cent of the total grocery market, Australian supermarkets have had no choice but to drive down prices in a bid to remain competitive. Combined with increasing award rates, hefty rents and rising energy bills, margins are being squeezed every which way.
High operational costs have had a knock-on effect for FMCG brands within the independent grocery sector, with supermarkets following the trend for consolidating product ranges and introducing more private-label products. As a result, many brands have experienced stagnating growth and some brands in the independent grocery sector are down double digits year-on-year.
For brands in the independent grocery sector, who draw from Metcash, it has never been so crucial to find new ways to stay competitive, increase cost-efficiencies and minimise lost sales. But how can they do this?
Consider new strategic partnerships with field sales and marketing specialists
Using an external field sales agency with specialist expertise in the independent grocery sector can pay big dividends when times are tough. Agencies that invest in technology and have trained sales staff on the ground nation-wide will ensure that marketing campaigns and instore merchandising initiatives can be deployed quickly and strategically. It’s important to capture and analyse the right data to manage the performance of the program, but also design and implement new data-driven strategies.
Joint partnership with another FMCG brand in the independent channel
With many FMCG brands looking to better manage their ROI in this channel, sharing outsourcing costs with other brands can be a smart move. One of the most expensive outlays for brands in the independent sector is its sales teams, who are responsible for growing distribution, increasing sales and providing layout recommendations to stores. Independents have the authority to order new brands on the spot (unlike the major supermarkets where the buying power is controlled through head office), which is why the sales teams must be highly capable, dynamic and customer centric individuals.
To make it easier for brands to engage the independent supermarket sector, organisation’s such as CROSSMARK have introduced its Independent Grocery team model where two non-competing brands can partner with a sales team, thus sharing the operational costs of training, travel, program management, etc. With just two suppliers sharing a team, companies can still receive a high level of focus, an effective and expert sales team with increased footprint while sharing the costs. It’s the perfect hybrid between the dedicated model, where just one brand pays for its own sales team, and the syndicated model in which multiple brands might share a team, but at the risk of diluting the effectiveness, share of mind and focus of the salesperson.
During these challenging times, FMCG brands are encouraged to review their in-store strategy and seek ways to maximise sales while managing operating costs. Greater field sales efficiencies through collaboration is just one way brands can remain competitive. It’s not easy but by joining forces with another non-competing brand, and sharing the cost of outsourcing sales teams, is a powerful solution that delivers amazing results.
CROSSMARK is Australasia’s largest retail marketing services company, with multi-channel expertise across supermarket, mass, convenience, pharmacy, and specialty retail, and serving more than 200 manufacturers and their brands. CROSSMARK works with retailers and manufacturers to market products and brands to consumers in the last six feet of a sale. This includes merchandising and point of sale, product sales training, consumer and staff incentive programs and product sales.Click here to find out more about CROSSMARK or call (02) 9439 1233.