Background
This quick blog will be most useful for people that have limited experience getting ranged with Coles and Woolworths supermarkets in Australia.
This blog is an overview of the process (review), buyer expectations and common mistakes. I must stress that every review is different due to the personalities involved (one of the many things I have learned over 25+ years of doing reviews).
Category Management
Category Management (CM) is a term that started to be used in the 1990’s. All supermarkets and practitioners have their own version of category management. As explained in my book Category Management is a way of thinking , I believe CM is a way of thinking, not a process, unlike others.
Understanding CM is important because it helps to explain how new suppliers could achieve new ranging in Coles or Woolworths. Category Management can be described as a business model where suppliers and supermarkets work collaboratively, in long-term mutually beneficially relationships, towards the common goal of maximising shopper and consumer satisfaction. The outcome of these partnerships should be to maximise the long-term financial results for manufacturers and supermarkets.
A key point to CM is collaboration. A common mistake new suppliers make is that they perceive supermarkets to be aggressive, so they aggressive in their approach. The smarter option is to focus on collaboration and trying to build relationships with supermarkets.
Category / Range Review
A category review and range review is the same thing – most practitioners say review. A review is when the supermarket decides which products to range, in how many stores (distribution) and the promotional plan (price promos, in store and online marketing activations etc). There are numerous other tasks, e.g. planograms, that new suppliers are generally not involved in. Every review goes through a similar process but are still unique.
For new suppliers Coles has supplier central and Woolworths Partnerhub portals . These portals will provide a lot of background information new suppliers should read before starting the process. Review timings are available online. Coles has RR (range review) schedule and Woolworths CDS (category development schedule) and they are the timing for reviews.
To make the right first impression new suppliers should know the review dates and the basic process / expectations supermarkets have. These details are on their portals. If you require more information, it is best to engage a FMCG consultant.
Category Strategy
Category strategy is simply the overall plan for a category. There are numerous options such as grow sales in an emerging category, defend current sales / share in a mature category etc. Category strategy is important for new suppliers because it will help explain why buyers are making decisions. For example, if a category segment is in sales decline the buyer will probably decrease the numbers of SKUs ranged (called range rationalisation) and give less shelf space to that segment. Obviously, in this example it is going to be harder to get new SKUs / brands ranged.
The key message for new suppliers is to ensure your plan aligns with the supermarket category strategy. If you are unaware of the category strategy it is OK to email the buyer, explain you are planning on presenting at the next review, and ask to be added to the email list for the category review invitation. Hopefully (not always) this invite will list supermarket expectations such as % margin, sales (UPSPW = units per store per week) and importantly their goals e.g. range innovative new products, range rationalisation etc. New suppliers can use this information to build an offer based on supermarket expectations.
Shopper Led
A fundamental in CM is meeting shopper demands. So, buyers will say their decisions, reviews are ‘shopper led’. Based on numerous data sources (loyalty cards, panel, qualitative research, scan, social media etc) buyers will review their current range to determine whether it is meeting consumer / shopper demands. Buyers will also use these insights when deciding what new SKUs / brands they may range.
The buyers’ objective is to create a range that meets future consumers / shoppers demands. Due to improvements in technology (AI etc) the focus is now on predictive modelling, not assuming what sold well last year, will sell well next year. The shopper led range will then maximise the financial and strategic performance of the category. Financial measures are normally sales, margin and share. Strategic objectives may include tailoring the range to target a specific target market. An example of a strategic objective would be, to offer a full range of fresh herbs to appeal to ‘foodies’.
To successfully engage with supermarkets new suppliers also need to be shopper led. You need to be able to clearly explain who your shopper is, what they want and that your product meets those demands. The more insights / research you have to support your claims the better.
Supermarket Expectations
Coles and Woolworths are public companies and shareholders regularly analyse their performance. This means buyers, like most employees, have KPIs (key performance indicators) that they are expected to achieve to ensure the company delivers the business plan. The KPIs include normal measures (sales, gross margin, share) and can include specific KPIs, such as sourcing new suppliers, depending on the category. Very importantly, buyers also have to ensure their suppliers meet the expectations of the overall business.
To improve the likelihood of ranging new suppliers need to understand supermarket expectations – more than just buyer KPIs. Many are driven by senior management (the business plan) and buyers implement the plan. A simple example, is in grocery the expectation is that the retail unit is in SRT (shelf ready trays), also called SFP (shelf friendly packaging). There are numerous other examples like using their transport options, supporting their retail media platforms etc. If you are unaware of the supermarket expectations, it may be best to engage a FMCG consultant.
The most common mistake new suppliers make is to fail to explain how their business meets supermarket expectations. It is more than just the physical product being sold or the relationship with an individual buyer. New suppliers need to ensure they have a supply chain that can achieve DIFOT (deliver in full on time), packaging meets standards, marketing support to sell their SKUs to Coles / Woolworths shoppers and a management structure in place to deliver the agreement. In my language the entire business, from factory floor to the boardroom, needs to retail ready.
Review Process
Prepare
Before the formal review process commences new suppliers should already be working to ensure they are retail ready. It is normal for new suppliers to spend 6 – 12 months ensuring their business is retail ready. The supermarket portals (mentioned previously) are a good starting point to review your current business capability vs supermarket expectations.
Initial Presentation
The formal category invite letter may only provide a short lead time, e.g. 2 weeks, before meetings will be had. You should have already completed your initial presentation (called the deck) and now have to update it to ensure it aligns with the category invite letter expectations. Tips for building your initial presentation include:
online search of current range (not all stores carry entire range) in different supermarkets
store visits to different stores to ensure you understand the current range and what different supermarkets are ranging
clear explanation (background) highlighting your entire business is retail ready, has capability to supply supermarkets
define who your shopper is, their demands and how your range meets those demands
overview of your suggested business plan (RRP, promos, activations etc) that is aligned with the category strategy
based on category strategy explain the benefit to supermarket of ranging your SKUs
Due to different personalities, buyers will have different expectations about how much detail to provide in the initial presentation. I suggest highlighting the key points and explaining the details will be provided later. Buyers are busy and will ask for more details, if they are interested in your initial presentation.
Different categories and supermarkets do have different forms / requirements. It is normal for new suppliers to have to complete a new line submission form to submit with their initial presentation. This form will normally list details such as RRP, promo price, cost price, case deals, GS1 verification etc. So, new suppliers should have their commercial plan finalised before starting the review process.
Negotiation
The initial presentation is just the beginning of the review process. It is normal to have a second meeting (sometimes emails) to agree specific details in your proposal. It is normal business practice for the buyer to request additional support, e.g. increased margin, greater spend on retail media etc. As a new supplier you need to ensure your proposal meets your business plan. Importantly, new suppliers are responsible for their offer. If a new supplier agrees to a deal that does not meet their expectations it is a supplier, not supermarket, issue.
A common mistake new suppliers make is to say yes to all requests supermarkets make. The reason is because they are focused on gaining ranging at ‘all costs’ or they think all suppliers have agreed to the same requests. Due to the sales potential in Coles and Woolworths this approach can have a major negative impact on the financial health of the business. All new suppliers need to ensure they understand their capabilities and that they are confident the deal is fair and reasonable. If you are uncertain what a fair and reasonable deal is you may wish to engage a FMCG consultant.
Onboarding
Finally, once the informal deal has been agreed the formal process starts. This includes setting up trading terms for a new supplier, agreeing logistics, loading product details including pricing, promotional slotting board and GS1 certifications etc into supermarket portals. Coles and Woolworths describe this process as onboarding. Via their portals there will be instructions how to complete onboarding and internally there are support staff, with job titles like ACM (Assistant Category Manager), that can help. It is the responsibility of the new supplier to ensure all details are loaded accurately and on time.
The last step in the review process is the initial order – called pipeline fill. It is normal for supermarkets to order 1.5 cartons per store, for delivery 1 or 2 weeks before the planogram is cut in at store level. The supermarket portals should have a sales forecast loaded to assist new suppliers with their internal planning. Any issues it is best to reach out to the replenisher for your category for assistance.
The initial order is just the beginning to the next step in your relationships with supermarkets – maintaining ranging.
FAQ Section
What are the 3 major mistakes new suppliers make when approaching Coles and Woolworths?
Unable to explain that they are retail ready, capable of supplying major supermarkets
Not shopper led – cannot explain who their shopper is and what they want
Don’t understand supermarket expectations. There are many expectations including management expertise / marketing support / product / packaging / pricing / supply chain (a short list).
What is the biggest mistake new suppliers make with their presentations?
The presentation focuses on the physical product. Buyers don’t range products they curate ranges to meet shopper demands. New suppliers need to ensure their presentation explains how they will help deliver the category strategy, in collaboration with the supermarket, by being shopper led.
How long does it take to get into supermarkets?
For most categories, supermarkets review ranges every 6 months. New suppliers should not present out of review time under normal circumstances. After the process is complete the initial order can be a month to 6 months later. Some categories, e.g. seasonal SKUs like Christmas paper, only review once a year.
Summation
This blog has provided a simple overview of reviews with major supermarkets for new suppliers. All supermarkets have different acronyms, processes and personalities to deal with. The key message for new suppliers is that your entire business needs to be retail ready, focused on building collaborative relationships with supermarkets and your brand / range is shopper led.
AI was not used in the creation of this post.