Background
FMCG consultants demystify the FMCG / supermarket industry for both suppliers and supermarkets. They utilise a broad skills base to clearly identify the key factors for business success. The work undertaken is normally grouped as shopper / consumer demands, supermarket objectives and supplier objectives.
FMCG consultants are unique as they focus on an industry – FMCG / supermarkets. Other consultants have a unique skillset to provide a service. For example, web developers, can build websites for any type of business.
Shopper / consumer demands
Much has already been written about the increasing power of shoppers in the supermarket industry. For example, Jim Blasingame, in his book The Age of the Customer, explains customers now control the relationship with sellers and they also control the product information. Also, in my book Category Management 2020 I explain that the internet has empowered modern shoppers. Due to the increasing power of shoppers many suppliers and supermarkets use a customer centric strategy.
Due to the increasing power of shoppers FMCG consultants will normally firstly focus on shopper / consumer demands to evaluate a business offer. Historically the thinking was about having ‘the best product at the best price’. Overtime suppliers and supermarkets have realised that shoppers / consumers purchase an experience. This means there are a large number of factors that determine the success of a product / brand. For example, some shoppers prefer Woolworths vs Aldi because Woolworths offers a home delivery service and click and collect. There is also a growing shopper demand for businesses to meet ESG (environmental, social and corporate governance) criteria. Some businesses, such as plant-based meat alternatives, have been founded to meet shopper demands for ESG.
FMCG consultants can explain the numerous demands shoppers have for suppliers and supermarkets today. They will explain that the overall experience is becoming more important than the physical product and price. This may mean suppliers and supermarkets may have to change their offer / business model to successfully implement a customer centric strategy. Due to changes in shopper demands it is common for consultants to recommend changes in business models.
Some common questions to be answered include:
What are the key factors driving shopper demand? Could include intangible factors such as digital.
How do shoppers prefer to purchase your product? Instore, online, personalisation?
What shopper demand does your product / brand satisfy?
How is your product / brand unique?
Supermarket Objectives
For suppliers
FMCG consultants can explain the different objectives supermarkets have. It is very important for current and potential suppliers to ensure they understand the supermarkets’ objectives. The objectives regularly change. Some of the many objectives for potential suppliers to consider include is the retailers’:
Preference for P/L (private label) or branded SKUs?
Plan to increase or decrease ranging in a category?
Preference for local or imported product?
EDLP or high/low pricing strategy?
After reviewing the supermarkets’ objectives then potential suppliers can decide whether there is a good fit between the 2 businesses. For example, a supplier with a focus on branded SKUs is not necessarily the right supplier for Aldi that focuses on P/L (private label) SKUs.
Also, supermarkets have different processes and expectations when engaging with suppliers. A FMCG consultant can explain the preferred approach for suppliers and retailers to establish and manage the relationship. As outlined in my blog There is no perfect category relationship different styles of relationships between suppliers and supermarkets can be successful. Major supermarkets, such as Coles and Woolworths, normally have category reviews. Aldi normally uses a tender process for their P/L (private label) SKUs.
FMCG consultants can explain supermarkets objectives, internal processes and expectations of suppliers. This information can be used by current and potential suppliers to build long-term mutually beneficial relationships between suppliers and supermarkets. FMCG Consultants can also work on behalf of suppliers to engage with supermarkets.
For supermarkets
Consultants can also review the plans and/or performance of supermarkets in the market. Disruption is the new normal in the supermarket industry and it is common for supermarkets to engage independent consultants to review plans and/or performance. Due to changes in the marketplace many projects focus on how supermarkets can better serve shoppers in the future. Common areas of review in 2023 include:
– increase ranging (depth and breadth) for personalisation or decrease ranging to manage costs?
– due to increasing logistic costs and reduced reliability source locally or import?
– pricing models for digital orders (click and collect plus home delivery) for cost recovery
– creating and implementing ESG (environmental, social and corporate governance) initiatives
Supplier Objectives
For suppliers
All businesses, including suppliers, are unique. It is normal for FMCG consultants to spend some time discussing the suppliers’ objectives with them. The goal is to ensure that the suppliers’ objectives are realistic in the marketplace. This normally includes a review of the financial plan to also ensure it is realistic.
FMCG consultants regularly review categories to provide feedback to suppliers about their objectives. For example, a supplier may have a great soft drink brand, but it may be unrealistic that retailers would range this new brand when they already have Coca Cola and Pepsi. FMCG Consultants will normally provide feedback focusing on what realistic opportunities may be available to suppliers.
Some common questions include:
– how will your product / brand grow the category?
– how will you support your product / brand?
– what is your pricing strategy?
Consultants can then partner with suppliers to create and implement a business plan to achieve the desired realistic business outcomes.
For supermarkets
FMCG consultants are regularly engaged by supermarkets to assist with supplier management / business transformation. Due to changes in shopper demand supermarkets regularly require suppliers to deliver different products and/or change business processes. Importantly consultants are independent and will provide honest feedback to supermarkets about their plans.
Due to the changing demands of shoppers a key focus in 2023 is ESG (environmental, social and corporate governance). Supermarkets are moving towards a circular economy and to achieve their goals will often require support from suppliers.
Summation
This quick blog has highlighted the broad scope of work that FMCG consultants can complete. The emphasis for most consultants is the optimal management of the supply chain. The supply chain is normally broken down into shopper, supermarket and supplier. The role of a FMCG consultant is to provide recommendations to supermarkets and suppliers on how best to meet shopper demands and thus create stronger long-term financial results.
The information provided in this blog post was general in nature. If you require more information I offer a free initial consultation. Contact Details .
