The big retail health check: Why HFSS is actually a golden opportunity

0

The UK government is cracking down on junk food advertising and promotions to tackle the obesity epidemic that affects one in four adults and one in five children aged 10-11, according to the NHS. To drastically combat this trend, it was announced that junk food advertisements is forbidden from our screens in front of the watershed at 9 p.m. starting in 2023.

Meanwhile, breakthrough regulations will come into force next year restricting where and how high-fat, salt, and sugar (HFSS) foods can be advertised in supermarkets. These laws affect all major retailers and apply to companies with 50 or more employees.

The government’s intent here is to encourage consumers to make healthier choices when shopping, but the changes will no doubt have a big impact on FMCG brands and retailers. Analysis shows that £ 3 billion sales of value could be lost as a result.

So many retailers are wondering how to anticipate the changes before the October 2022 deadline. To avoid serious impact, they need to use the data they have to determine how best to proceed. The best retailers will turn to analysis and predictive modeling to ensure they are making the right decisions. There are three main areas that this analysis should focus on.

Planning new actions

According to a survey of 50 UK retailers conducted by Incisiv and Symphony RetailAI, in 2020 26.4% of grocery sales were based on promotions. HFSS regulations mean the end of “buy one, get one free” promotions for products like candy, chocolate and chips, forcing retailers to rethink their advertising plans.

These volume price promotions usually lead consumers to almost buy 20% more than it would otherwise, retailers must decide which are the best alternative products for mass advertising to replace HFSS items.

By using historical data, predictive models, and even the use of AI, retailers can review which products have responded well to promotions in the past, as well as predict how they will respond in a different advertising context in the future. This should not only assess which products have proven to be particularly profitable when advertising, but also whether they have helped attract new buyers, spend more or buy something else in the same category or elsewhere in the store .

Technology is the key to fully uncovering previously unknown category dynamics. With the right technology, retailers can analyze the relationships between past performance and promotional activity and identify trends that translate into actions that increase sales, margins and customer loyalty. This will be key to bridging the void that will arise when HFSS foods can no longer be advertised.

Use of customer loyalty data

Loyalty card systems provide a wealth of data that retailers can refer to to anticipate the changes likely to need to be made after the introduction of the HFSS regulations.

At a granular level, retailers can view individual transactions and track a customer’s sales history to understand which items customers turn to when their normal purchases are unavailable or do not include promotions. Understanding that each individual business serves many different customers means that segmenting customers into groups of common behavior is key to making the right business-level decisions.

Customers may only purchase one specific item during the promotion. Classic examples of this are multipacks with soft drinks or chips, for which buyers usually do not pay full price.

Insights from loyalty programs allow retailers to segment their customer base based on cart size and spend – so they can see who is spending more on HFSS items and if they are shopping in a variety of categories.

This will help retailers decide how best to target these shoppers in alternative avenues, even after the legislation goes into effect. For example, they might choose to reduce their inventory of high-salt chips and instead focus on alternatives bought by the most important groups of customers, with one of those options always on offer.

Manage branch and space planning

With end-of-aisle and checkout promotions that get out of the equation under HFSS regulations, shelf space with no promotion becomes an important consideration for retailers. Category managers, for example, have to think about reorganizing their categories on the shop floor to compensate for lost sales.

Here too, decisions on store and space planning should be guided by the data. If you look at the shelf, where have products been previously placed to maximize sales performance while shoppers browse? Which healthier alternatives perform well when moved to the end of the aisle or to the checkout and entice customers to buy?

There is no longer a need to reorganize an entire store to assess the impact of different layouts.

Retailers are preparing for the full impact that the HFSS legislation will have after it enters into force. In order to position yourself optimally by then, you should use and maximize the data you already have. This will give them a better overview of promotions, category decisions, and store layouts – and ultimately make the transition smoother for the next year.


Julian Miller is Head of Category Planning Industry at Symphony RetailAI


Source link

Share.

Leave A Reply