It is time for food manufacturers across Europe to take a more sophisticated approach to range optimisation, Stephanie Augier, European analytics and shopper account director at IRI, argues.
Years of deals have left brands and retailers in all countries battered and bruised, and incredibly tense. Times are changing and both parties are desperate to find new ways to grow their revenues.
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Many countries, such as the UK, have become incredibly price competitive in recent years so retailers here welcome more emphasis on range optimisation.
We are starting to see the same trend in France and Germany. In these countries stores are looking closely at the benefits of implementing a longer-term strategy of boosting margins by having a more effective range of products on their shelves.
In response manufacturers must up their own game. In fact, it should be a consideration in everything a brand does, from new product development to sales and marketing.
When developing products for any specific European market manufacturers need to think more creatively about how a new product will stimulate demand for retailers by appealing to particular groups of shoppers.
Retailers need this strategic support because the internet has brought about such a huge change in shopping behaviour. How consumers research, place orders and ultimately shop for food means it is harder to create targeted price-led and other promotions.
With this added focus on range, the whole NPD process should be related to range optimisation.
But manufacturers must have the right tools available to them to increase their chances of appearing on retailers’ shelves. They require data and analysis of shopper behaviour to understand what European consumers want to buy, whether they are purchasing food in France, Germany, Spain or the UK.
Manufacturers need more than a consumer panel to find the answers. They need to combine these findings with expert analysis of Epos data for specific categories.
Like retailers, they need to know what drives shopper demand and what makes people choose particular food items when they are buying in a physical store compared to online.
This knowledge of shoppers’ preferred product attributes should underpin the design of new food products in a world where range optimisation is now king.
It is important that manufacturers avoid innovation for innovation’s sake in the hunt for a place on the shelf. There is always a danger that innovation can erode the equity that the core brand has built up over many years, so there has to be a balance.
Range assortment must also be considered by food companies when devising their on-going sales and marketing strategies.
They need to know they have the right products for a local market. Food brands must understand how their products might have more impact in one area than in another and tailor their own sales and marketing accordingly.
It might mean that certain items have to be positioned differently to stress their continuing relevance to a particular shopper group to boost customer loyalty as well as revenues.
Consumers have often reacted to having too much choice in recent years by defaulting to food brands they know and trust. In a category that is perceived as complicated a well-known brand is seen to simplify things.
However, retailers still need to realise that there remains an important place on their shelves for niche products aimed at a particular target market. Consumers will expect to see them or they may go elsewhere if they do not.
If retailers get their range assortment right it should be a win-win situation for them, manufacturers and shoppers. Price and promotion are short-term solutions but effective range optimisation can bring longer-term customer loyalty as well as increased profits.
