Partner Content
We’ve all been guilty of a hungry impulse purchase once the shopping list is complete at the grocery store. Be that a bargainous promotional offer, or a treat from an endcap, the sweets aisle, or the frozen section ending up in our cart. And it’s more often than you might think. Almost a fifth of products purchased in stores are picked up impulsively with 7.9% at the end of an aisle, 5.8% from a display at the front of the store, and 5.7% from a checkout display.
While it’s no surprise that more is being done to tackle and challenge the ability for those high fat, salt & sugar products to be promoted, with the HFSS legislation fast approaching (currently slated to go into effect in the UK by January 2023), retail and grocery brands have to adapt quickly and start now. There’s real money at stake, too. Retailers stand to lose £1.1bn in sales each year once HFSS goes into effect.
Retailers like Tesco and Sainsbury’s have already trialed removing confectionary endcaps from some of their stores, and chip brand Tyrell’s have gone to market with HFSS-compliant chips.
The HFSS legislation will be one of the most seismic developments in grocery in living memory. While the challenges are huge for grocery retail, opportunities exist for those who act fast enough to take them.
HFSS headwinds faced by marketers
Marketers for retail and grocery brands will face key business challenges due to HFSS; however, with challenges always come opportunities. What will be key is knowing how to reach your audience.
”There will still be connection points that retailers can find with people to build brands and compete for spend. It’s a question of knowing which channels are likely to work most effectively for your target audience,” explains Kantar.
In addition to potential lost profits from HFSS foods and endcap confectionary sales, other key challenges brands will face:
- The need to recoup costs. In addition to the potential loss of £1.1bn, retailers will need be smart about how they maximize profits, especially with the often complex FMCG-retailer relationship, the loss of volume promotions and in-store displays, among others.
- The best path to market. Retailers will need to adjust how they go to market to ensure that they are connecting with new and existing customers.
- Supply and demand impact. HFSS legislation will result in a huge impact on supply and demand for brands and retailers, especially as some products will only be marketed after certain times of day (after the 9pm TV watershed for example) or not at all.
- Potential impact on revenues and profits. With changes in supply and demand, changes in volume of goods needed, promotions allowed, and what in-store displays can look like, retailers could see a huge impact on their revenue sources and profits. This will be a key business challenge for many retailers.
- Physical and online infrastructure changes. The time and cost of adapting to new store layouts will be massive. This will also include how to do promotions for online activity, websites, and app marketing.
- Potential change in business models. For many retailers, they will need to invest massive resources into adapting their business models to offset potential losses and the new HFSS restrictions.
- Retailers’ own promotions will need to be adapted. For many retailers, seasonal campaigns are huge. Promotions and campaigns for occasions peak season, summer sports, and Valentine’s Day will be heavily impacted. These are the times of year where splurge on sweets and indulgent food take center stage.
Brands and retailers need to consider how to best engage consumers to drive sales and increase brand awareness.
Are you a retail marketer? Our ebook about how retail marketers are under pressure is for you then. It’s our take on what challenges retail marketers face when generating brand awareness and leads, and how gamification is key to engaging and retaining customers in retail. Read now
What are the opportunities for marketers?
Given the major changes that HFSS brings, it might be easy to think that there are only challenges ahead. However, we see plenty of opportunities for retailers and brands to adapt their marketing strategy in an HFSS-compliant way.
Here are 4 immediate opportunities for retailers to consider:
- Prioritize customer experience – extend the moment. Focus on making every experience your audience has with you memorable. Look for innovative or new ways to do this. With game mechanics, you could be driving engagement from an on-pack QR code to an online competition, driving in-store footfall from a seasonal puzzle game on your social media channels – or creating an extension of the in-store experience with an interactive game. The options with gamification are truly endless. While the legislation and rules will change, the importance of customer engagement doesn’t.
- Put your story forward. Rather than the product at the heart of your marketing campaigns, consider putting your unique brand story at the centre. If you don’t have a strong brand narrative already inplace, the time to craft it is now. And bringing it to life in memorable, authentic and engaging ways is imperative – you won’t be the only brand rethinking your approach.
- Lean in to what is working. You know which channels have proven to work for your brand. You also know which channels will continue to work most effectively for your target audiences and those that are worth investing in; find ways to leverage these really well, across each and every segment. Be it above the line, social media, in-app or experiential – make those channels work harder for you.
- Look to the future. For in-store, look to build new revenue streams for endcaps and other premium spaces in stores. Think of alternatives for impulse buys that are non-food brands. There’s a big opportunity to be grabbed with both hands by these brands – and making those relationships work effectively for both parties is imperative.
Lastly, be creative, be innovative, be unique! Use these legislative changes as the opportunity to communicate and truly engage your shopper audience.