Sunday, 1 April 2012

Fresh Is The New Black - Profit Warnings Follow Shortly

Sainsbury's Mike Coupe, in an article for Retail Week, has stated that Fresh is the future. He's not alone in this view - Morrisons reinvention of their stores is centred around fresh food, early noises from Tesco suggest they see this area as key to their recovery strategy, while Asda have recently revamped their fish counters.

There's no denying that fresh food departments can define a store for shoppers. Even if you're not buying into the categories well-presented and bountiful produce fixtures, fresh counters and bakery departments, can help make you feel that you're in a great store. But, this can come at a cost if not enough customers get wowed so much that they put the products in their trolley. If they don't, you're suddenly looking at the most expensive POS materials in the industry.

The problem with Fresh is having kahunas big enough to wait for the shoppers to take to the new range. My photo of Asda (left) desperately trying to clear product from their fish counter just after the relaunch sums this up perfectly.

With ambient products, you have a lot longer (although judging by the out of code Hershey's products found by fellow blogger Dresserman, even that's not long enough sometimes!). You're lucky to get a week's code in store, so you have to ensure you're stocking winners. There's no room for slow-moving range perception driving lines in fresh.

Most retailers will have guidelines for stores on how long they must stock a poor selling fresh SKU before they can make a local call to switch off reordering. However, canny store managers know that their boss won't give them a rollicking for saving the waste budget. And while big displays of sexy new fresh products may look great when they first come in, bulging Reduced To Clear bays or large sections of the aisle covered in reduced stickers can be very counterproductive in terms of making your shop look appealing.

So, how do you make fresh work for you? Well, good old fashioned smoke & mirrors is a good place. Morrison's new sexy produce kit makes a small amount of stock look bountiful. JS also get a good effect from good use of signage and angled trays in their produce departments. Both of them also keep to the traditional location of produce - at the entrance. Full-looking and colourful displays of produce set the scene for a store in ways that pallets of heavily discounted stock will never do.

Bakeries are also key. Asda and Morrisons both have spectacular Bakery offers and continually innovate in this area. Good use of kit in this area can also create an artisan feel even to customers walking past and purchasing their Kingsmill rather than Rustic French Country Baguettes. Although Tesco do make efforts in this area, even in Metro stores with the pastry offer, the operational simplicity is exposed to the customer and the range is often uninspiring. JS departments look great but I must say I'm always disappointed by the choice. It is a credit to their PR department that they got more exposure for their Tiger bread than the other retailers, despite Asda probably leading the way in the product!

Another thing that they need to do - and I'll be honest in saying I don't know how they can - is to make shoppers feel that it's THEY'RE fault when their chosen item is out of stock. M&S used to have this perfectly - they probably still do on the Dine In For £x deals they run. Generating some "When It's Gone, It's Gone" exclusivity is hard, but essential for avoiding excessive stock heading for the clearance bay.

My final suggestion is value-adding. Asda have been doing this for years with their Pizza Counters and the Fish initiative is pretty much along the same lines. Value-adding allows you to spread the risk on each case coming into the store by offering to more customers more ways. If done well, it also adds an extra service connection with the customer and another chance to delight them and make them loyal to your store.

When you look at these points, you start to realise that Tesco have the furthest to go. Many of their counters have been replaced by "grab and go" points which remove the service element. The manned counters that remain have relatively short opening times, leading to customer disappointment. Meanwhile, Produce departments have been shifted to the middle of the stores for both operational reasons (most replenishment during day, so bring the department closer to the warehouse) and strategic reasons (enter in Non-Food).

Fresh is definitely a hot topic at the moment, but will Coupe and his peers hold their nerve when the waste bills start piling up? Only time will tell


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