Food For Thought – HFSS
Bryan Roberts – Founder, Shopfloor Insights
This October will see the launch of a raft of new regulations in English supermarkets on the promotion and placement of pre-packed food and drink high in fat, salt, and sugar (HFSS). Among the new rules will be the outlawing of volume promotions (3 for 2, BOGOFs etc.) for these items as well as restrictions on where they can be displayed – gondola-ends, checkouts and store entrances will be off limits.
The changes, which might well represent the biggest challenge to operations and store economics in the history of modern food retailing in England, are intended to reduce consumption of HFSS food and drink by discouraging impulse purchases, pester power and stocking up, with the end goal of reducing health problems such as obesity and heart disease.
As a public health initiative, this is laudable, but from the viewpoint of impacted manufacturers and supermarkets, the impact will be financially and operationally challenging. For non-impacted suppliers, the prospects of an in-store land-grab and a place in the spotlight beckon.
For some impacted suppliers, one inevitable outcome will be a decline in sales for legacy products. Confectionery suppliers, for example, rely on gondola-ends, pallet displays and free-standing display units (FSDU’s) for a huge chunk of sales. Without these secondary displays, revenues for these products will collapse by at least a third.
Many manufacturers have embarked on a reformulation campaign ahead of the new rules: introducing new recipes for products that reduce the sugar, salt, and fat content of their brands to get below the HFSS thresholds. Others have launched new healthier brands and products to become more HFSS compliant, while others have initiated tactical mergers and acquisitions to buy their way into healthier segments of the market.
One opportunity for confectionery suppliers to circumnavigate the new restrictions will be via pick & mix – loose sweets or chocolates do not count as pre-packed, so the deployment of standalone or gondola-end pick & mix units remain a possibility for impacted suppliers. Another opportunity to mitigate the impact of the rules for retailers and suppliers will be through deploying more eye-catching in-aisle signage or fixtures to highlight brands, categories, or promotions. Asda has looked towards digital signage to achieve this, while Tesco is experimenting with distinctive yellow fixtures.
For the retailers themselves, a host of operational and financial obstacles await them. Key seasonal activations, such as Christmas, Easter, and Halloween, revolve around HFSS categories and have historically relied heavily on pallet displays, FSDU’s and gondola-ends – none of which will be possible. The activation of seasonal campaigns in-aisle will be a true test of ingenuity and creativity.
An average supermarket supposed to merchandise the three or four pallets of Christmas chocolate tubs if not at the store’s entrance? In-aisle? On the back wall? By removing gondolas and having distinct areas for pallets and FSDU’s?
Another challenge for the supermarkets will be the replacement of HFSS products in key store locations. Several retailers, such as Tesco and Sainsbury’s, have already removed HFSS (or all merchandise) from checkouts, while others like Asda and Morrisons will either be looking to remove checkout merchandising altogether or replace HFSS lines with healthier items or exempt categories.
For gondola-ends, there are myriad opportunities to replace HFSS products while retaining a degree of commercial income. For instance, Tesco has looked to brands in categories such as alcohol, laundry, and kitchen towels to take up some space, while using reformulated snacks, cereals, and confectionery to occupy other gondola-ends. Sainsbury’s has completed similar swaps in some trial stores, while other stores have seen it remove gondola ends altogether, replacing the plinths with signage.
One longer-term option might be the use of semi-permanent branded gondola-ends, perhaps featuring illumination or digital signage.
These types of ends, for categories as diverse as beer, spirits, toys, condiments, health & beauty, and laundry, create amazing focal points for brands, while still delivering commercial investment for the host retailer. Already commonplace in European grocery retailers, it seems likely that some brands and retailers might give this a try in English stores.
Overall, the opportunity for exempt categories and suppliers to grab some prime in-store real estate is significant, but for impacted brands and products the challenge will be trying to prop up sales amidst much lower visibility. One thing shopper marketers like is a challenge. Watch this space…