Covid-19 came quickly and will depart slowly. Global leaders are walking a tightrope between health and economics. Whilst the situation is fluid and unpredictable, business leaders must quickly shift attention from short term challenges founded first and foremost on the safety of people and availability of essential products, to how to exit the pandemic at pace and rebuild business momentum.
Lockdown is starting to ease in many markets and social interactions, including sports, are starting up again. In a recent interview Paul Mills-Hicks, Commercial Director of the UK’s second largest supermarket, Sainsburys, made it clear that attention must now quickly move to in his words, “being match fit for the Golden Quarter.” (Paul Mills-Hicks on Sainsbury’s commercial priorities) Attention must now be extended to the commercial agenda and plans must be in place by September to take full advantage of increased demand leading up to the festive season.
Revenue Growth Management:
Revenue growth management (RGM) – the discipline of driving sustainable profitable growth through a range of strategies around pricing, portfolio and trade investment – has an important role to play to accelerate this exit.
Organisations must quickly reset existing strategies and rework the RGM building blocks:
- Pricing: stockpiling and product unavailability have forced consumer trial of alternative brands and products. The post-crisis recession will exacerbate this trend as many consumers seek more affordable options. Suppliers must re-evaluate brand and pack pricing architecture and consider changing the pricing of certain SKUs or launch new packs that are more affordable and convenient. Sub-brands with differentiated propositions, innovation or M&A may also be considered.
- Portfolio: the shift to at-home consumption may become structural as consumer habits around working and socialising more from home change, opening up new occasion-led assortment opportunities. e-Commerce growth has accelerated and discounters continue to grow as shoppers seek out value and convenience. In an effort to ensure lockdown availability of ‘must-have’ SKUs, many suppliers curtailed parts of their portfolio. Winning suppliers will proactively make category-based recommendations on which parts of their and their competitors’ ranges should not be re-instated and they will ensure that their new line-up is aligned to the fastest growing channels and customers.
- Trade investment: stock-up missions in grocery retail have increased significantly, shopper frequency has dropped and shoppers are spending less time in store. Secondary display space is restricted due to social distancing. Retailers are looking to simplify operations, reduce sales peaking and satisfy demand for shopper missions rather than drive short term sales through promotions. Suppliers must strengthen operational relationships to ensure that the basics are in place and redefine trade terms to clearly demonstrate the value that they bring across their total package, including things like investment in sales forces and equipment, that are often overlooked. Promotional plans will need to be reset, fixed-sum payments for promotions challenged and growth bonus thresholds reviewed to make them both challenging and motivating. Furthermore, suppliers may want to delay the timing of annual contract negotiations until they have more clarity on what the next normal looks like. This said, retailers have done an amazing and often unheralded job on the frontline. Suppliers must embark on these discussions with empathy and collaborate closely as they and their retail partners work out their joint future together.
So how are you doing? Will you be match fit for the ‘Golden Quarter’?
The German football Bundesliga recently returned to action after a ten-week break during lockdown to begin a six-week sprint to the title. Champions Bayern Munich came out all guns blazing and they are unbeaten since the restart. Not only have they opened up the gap over second placed Borussia Dortmund but they have now scored the highest goals ever in the history of the Bundesliga. Sadly league stragglers Paderborn are yet to win and have fallen further behind the rest.
If you want to be a champion supplier and win the ‘Golden Quarter’, there is no time to lose. Get match fit and ready for the sprint. RGM is a great place to start and provides the perfect platform for you and your selected retail partners to win the ‘Golden Quarter’ together.