Should grocers just say ‘no’ to big CPG brands when it comes to shelf decisions?
With proprietary data and software that measure “walk rates” in stores, grocers are increasingly taking greater control over what goes on the shelf and where, according to a Wall Street Journal report.
In many cases, legacy brands are losing shelf space to either private labels, which offer grocers higher margins, or products from emerging brands that better address natural and healthy trends. Carrying more retailer-owned and niche brands helps stores to differentiate.
Perhaps the biggest news in the article is that the use of category captains has diminished over the last 18 months. More grocers are also becoming open to foregoing slotting fees with confidence their in-house insights are creating an optimal shelf mix.
In response, bigger brands, from General Mills to Clorox and Hershey, are stepping up their respective analytical capabilities to again prove they have deeper insights into categories in an effort to recapture some shelf influence, according to the Journal’s reporting.
Critics have long charged slotting fees make it more difficult for smaller brands to secure shelf space, although the long-used practice obviously has some fans. In early 2018, reports arrived that Whole Foods was starting to require vendors to pay for shelf space, displays and in-store sampling.
An often-cited study from Yale and Cornell — albeit published back in 2005 — found slotting fees helped balance the risk of new product failure between manufacturers and retailers. Products “likely to be a sure hit” also tended to find shelf space without slotting fees.
Critics charge category captains create bias in the mix, although Progressive Grocer’s 2019 Category Captain Awards suggests the practice remains common. Fifteen brands were honored as captains, including Chiquita Brands, Kellogg, Nestlé Purina and Molson. Another 13 were designated with a Category Advisor distinction (honorable mention).
Winners emphasized that retailers must trust that the vendor’s knowledge and expertise will guide what works best for the category currently and as it evolves.
“The retailer must trust that the manufacturer is truly looking out for the success of the category as a whole, and not simply for their brand,” Joel Warady, general manager, Enjoy Life Foods, told the publication.
- Grocers Wrest Control of Shelf Space From Struggling Food Giants – The Wall Street Journal
- Why are grocers still missing the mark with small food brands? – RetailWire
- How can grocers capitalize on small brand allure? – RetailWire
- Whole Foods asks vendors to pay to play – RetailWire
- The hidden war over grocery shelf space – Vox
- Study Sheds New Light on Role of Retail Slotting Allowances – Yale
- 2019 Category Captain Awards: Shopper-Centricity or Bust! – Progressive Grocer
- 2019 Category Captains – Progressive Grocer
DISCUSSION QUESTIONS: What role do you think CPG manufacturers should play today in how grocery retailers manage product assortments, shelf space, displays and marketing? Is the use of category captains still relevant in the current retailing environment?