Innovation is vital for manufacturers looking to sell their products in an increasingly competitive and complex market and in this section we showcase some of the work being carried out.
Astute manufacturers are also looking to grab a bigger share of the lucrative independent retail sector, and recognising that to do so they need to form a partnership with the experts. They realise that the best way to get their products in front of consumers on independent retailers shelves is to form partnerships with the wholesalers supplying those stores.
One of the biggest examples of this phenomenon is Landmark Wholesale’s Hot House programme which has been supported by a range of different manufacturers. They have provided financial support and category expertise to the project which aims to provide a makeover for independent retailers’ shops that reflects best practise. The project began in 2003 and has now converted more than 500 stores and produced average sales uplifts of 30% after completion. Manufacturers have been able to see the benefits of the project and have now committed funding for the next four years which will allow Landmark to reach 2,500 stores.
Another project that has attracted support from a range of manufacturers has been the My Shop is Your Shop campaign and its central event National Independents’ Day. With co-ordination from the Federation of Wholesale Distributors, manufacturers have been able to work with wholesalers on a scheme that has helped to highlight independent local stores’ vital role at the heart of their communities.
Each year National Independents’ Day has been attracting greater support from all sectors of the market and this has been rewarded by huge coverage in the media. This year’s event was supported by about 35,000 independent retailers and supported by money-off coupons for 10 leading brands published in the Daily Mirror and its sister paper in Scotland the Daily Record (see page 16-17 for more about MSYS).
The FWD is also responsible for the longest running and most successful category management exercise in the wholesale sector. The FWD Blueprints, which advise independent retailers how to most effectively merchandise their beer, wine and spirits fixtures, are supported by the major drinks companies. Set up in 1994, initially looking at the beer category, the Blueprints’ success has resulted in their expansion into the wine, spirits and ARTDs categories. The latest innovation from the Blueprint project is a security cap which allows independent retailers to put spirits on self service display, and trials have already shown very promising uplifts in sales (see page 42).
Another project that has driven a lot of innovation is the Cash Carry Retailer Tracking Programme, operated by HIM. By interviewing independent retailers about their plans before entering a cash and carry, and what they have bought when they leave, HIM has been able to generate a lot of insights into the way independent retailers shop particular categories.
Manufacturers and cash and carries supporting the project have then been able to use these learnings to improve the way their categories are presented to retailers. Again the success of the project has been demonstrated not only by the number and range of manufacturers and cash and carries supporting it, but also by the fact it has now spawned the Cash Carry Caterer Tracking Programme which aims to achieve the same results for caterers shopping in cash and carries.
As this section in the magazine demonstrates, however, innovation is not just the realm of programmes involving many companies – individual manufacturers can make a difference. One example is Tropicana, which believes that penetration of chilled juices into the wholesale sector is too low and that many wholesalers are missing out on a major opportunity in chilled juices as a result. It states that only one in seven cash and carry customers purchases chilled juice whereas almost 80% of customers purchases soft drinks.
To rectify this, Tropicana has introduced a number of initiatives to help wholesalers maximise the chilled juice opportunity including point-of-sale in depot; new case designs to ensure the product stands out on the shelf; and sampling activities to raise awareness in depot. And these initiatives are working. For example, a sampling activity in a depot last year resulted in a whole week’s worth of sales occurring in just four hours.
Another example is an initiative by wholesaler DCS, an expert in the health beauty and household categories. Following a successful toiletries merchandising and POS trial with Landmark at the beginning of last year, DCS recently rolled this out to 38 Landmark members and also included all the household categories.
Richard Jorden, commercial director of DCS Europe, says: “While it is still early days, the sales are encouraging and we are looking to replicate the success of the health beauty project, where sales grew by up to 38%.”
The lesson to be learned from all these examples is that innovation can be highly profitable, particularly when manufacturers and wholesalers are working in partnership and pooling their expertise.