Blog: Mars shows how to grab bigger chunk of sales
Dean Best | 11 June 2009
We've broken for lunch at the British Retail Consortium's annual conference in London today (11 June) and, as you'd expect, this morning's discussions have provided plenty of food for thought.
After an assertive speech from Tesco boss Sir Terry Leahy (he even coined the retail giant's "Every Little Helps" strapline as he outlined ways retailers could help the country's cash-strapped consumers), it was the turn of one of the UK's biggest suppliers to brave a retail-dominated audience.
Fiona Dawson, head of Mars Chocolate UK, admitted feeling a little "trepidation" as she sat in the audience ahead of her appearance on stage.
However, she forcefully presented a series of ways in which the awkward bedfellows of retailers and suppliers could work together to beat the downturn - and, notably, demonstrated just how the big brand-owners can grab market share during the recession.
As well as emphasising the importance of product availability and the significance of getting promotions right, Dawson's comments on SKU proliferation provoked some raised eyebrows.
Dawson said that, over the last two years, there had been a "huge proliferation" in the number of SKUs sold in store. Quite reasonably, she pointed out that the jump in the number of lines in store tied up growing amounts of a retailer's working capital - a critical consideration in these credit-crunched times.
Working with suppliers to cut the number of SKUs on shelf would reduce consumer confusion and increase sales, Dawson argued.
"If you take a category like confectionery, where people spend four seconds - four seconds - making their choice, then we need to make sure we're absolutely visible and clear to our consumers," Dawson said.
That visibility is critical for a company like Mars. Less SKUs mean fierce competition among suppliers for shelf space - which benefits suppliers the size of Mars, who can meet retailers' demands for lower prices and benefit from brands which are the number one or two in their category, such as Mars Bars.
For smaller suppliers, or brands that retailers feel they can do without, trimming SKUs can mean the loss of valuable listings. Leaving more room for the Mars stable.
"We've seen an up to 14% increase in sales by limiting down the number of SKUs," Dawson revealed.
Now, that's what we call a win-win for the likes of Mars!
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