Operating in developed markets poses a particular challenge. Food manufacturers and retailers must look for pockets of growth in a sluggish landscape that is competitive to the point of saturation.
To grow sales in markets like the US and Europe, companies must build brands, develop new faster-paced categories and invest in innovation.
Lindt has succeeded in doing just that. Last week, the company posted double-digit gains in the US and revenue growth nearing 6% in Europe (impressive, given the exceptionally poor economic conditions in the region).
just-food caught up with Ernst Tanner, the CEO of the Swiss chocolate group, who attributed Lindt’s success to its ability to bring new consumers to the premium chocolate category, on the one hand, and steal market share from rivals on the other. This has been achieved through innovation, targeted promotional activity and brand strength, Tanner said.
Meanwhile, in UK retail it emerged that The Cooperative Group is also looking to innovation in a bid to reverse negative share trends, with plans in the offing to launch itself into the waters of online retail.
The country’s fifth-largest grocer said late last week that it is testing various trial formats as it looks to build a distinct online presence that compliments its positioning in the convenience sector.
“We recognise that the online grocery market is a rapidly growing channel, which provides a significant opportunity for us as, primarily, a convenience retailer,” Co-op food retail chief Steve Murrells explained.
The move recognises that grocery retailers must respond to shifting market dynamics in order to seek out new avenues for growth in a sector where sales volumes have come under sustained pressure. If successful, the Co-op will have a showing in the two areas of growth in UK grocery retail – online and convenience. If the company can eke out a unique online proposition that meets the needs of its convenience-focused consumer base. If.
But getting this combination right will be no mean feat. It is hard to imagine an online concept that can be truly geared to the needs of the convenience market, and even harder to conceive of a model that will do so cost effectively when other retailers, whose average basket size is far greater, still struggle to boost the margins of their online businesses.
While operations in the high-growth online arena generate plenty of headlines, it is worth keeping in mind that this growth comes from a smaller base than business generated at core bricks and mortar stores, which still account for the vast majority of revenue growth. For this reason, it is vital that retailers get their in-store experience right.
As our pages argued last week, delivering a good in-store experience can be a challenge in itself – with as few as one in 25 of grocery shopping trips ending in complete success.
The potential opportunity here is evident. With a staggering 96% of shopping trips ending in varying degrees of disappointment, perfecting the in-store experience offers a means to rejuvenate sales in a stagnant market where growth is being driven by price inflation.
Retailers need to deliver the right product, in the right place, at the right price and in the right pack size and format. While multichannel expansion is an important plank for growth, it should not overshadow getting the retail basics right.