‘New’ - a word that draws the eye and adds a beat of excitement on that journey down the aisle. More of our interesting and diverse young businesses created before, during and after COVID are grabbing the offer of a platform to be discovered by more shoppers, who incidentally according to NielsenIQ are now far more likely to walk the aisles to find that perfect product fit.
Tesco’s Incubator, Sainsbury’s Future Brands, Co-op’s Apiary and ASDA’s Nurture Programme have been around for few intakes now, making good on their promise to support their smaller suppliers with time, effort and payment terms designed for businesses growing from kitchen tables to WeWork desks. In fact, these schemes are now so big they’re filling prime time slots as Channel 4s ‘Aldi’s Next Big Thing’ shows.
At first glance it’s a win-win for both. A volume commitment life raft for the brands which the retailer will use to bring some variety to shelf, encourage spend and hope that these bright young things can help attract those more promiscuous younger small basket shoppers to visit more often. But, while these schemes are made for scaling brands, do the realities of how these businesses operate make it less of a perfect fit?
Having worked with a number of the alumni over the years I know for a start these schemes require similar time and energy commitments to that of the retailer - something more difficult to do when you’ve got under 15 heads covering over 30 roles. Data and insight are what these brands yearn for, and these schemes give them plenty of it, but what’s given paints a broad picture for the entire class intake, versus what a brand would ideally need to fully guide their early days on shelf. That data itch isn’t really scratched.
Are these factors big enough for scaling brands to consider swerving the invite? Absolutely not. Beyond the immediate volume relief, they also provide a bullet-proof case study to kick on from, it’s one of the rare no-brainers for businesses like these, a quick and relatively easy decision to give their brand much-needed shelf exposure, but there lies the potential issue. As much as this is a ‘win and worry’ moment the same exposure of its existing packaging, product comms, sell and occasion fit happens. Exposure to a tough crowd who with the current climate just got tougher, and get easily spooked if something doesn’t look or feel right.
No time has been invented to discuss who actually is the target grocery shopper (and importantly, who isn’t) or if their story to the category and future retailers’ is watertight. What about the message hierarchy? All of a sudden, the brand is being judged against brands with bigger budgets, bigger teams, and most of those questions worked out.
That no-brainer all of a sudden has the potential to dominate decisions, especially as they know this moonshot can’t fail. And as many have found, the alumni cloak doesn’t incubate them for long if the rate of sale and margin returns don’t stack up for the retailer. They’ll be out as quickly as they went in because in this scenario the retailer is all out of skin for the game.
So how can a grocery newbie plug some of these gaps and make the most of this opportunity, with limited resources and budget to spend? How can they balance their efforts between the shorter-term commercial results the retailer wants and the longer-term building of the brand in grocery and beyond. This tension is, and always has been, the long and short of it for brands and retailers, whatever the size.
Before any steps, stages or frameworks even get muttered the first thing for these brands to have is the right mindset. These scaling brands have clearly great products, sharp minds and a strong wind behind them right now. They’re used to hearing good things and feeling a sense of momentum. But grocery in its many forms is different. It’s brutal and applying the same playbook won’t work here. Start with the assumption that how you as brand owner view the brand isn’t how a shopper or retailer probably will - and they won’t care as much about it as you wish they would either. Assuming you know (almost) nothing is bizarrely the safest place to start. Hunches might exist, but better to assume they’ve got as many holes as a Swiss cheese until proven otherwise.
To make sure these platforms give these brands the traction they yearn for, three steps should be undertaken as soon after their shelf debut as possible. They’re intentionally designed as simple to follow because this won’t be the only thing keeping founders up at night.
REVIEW: WHAT’S THE PRODUCT’S LIFE ON SHELF BEEN LIKE?
Gather as much data as possible, paying particular attention to price and promotional performance in the early days of listing to check you are in step with the category. Now it’s time to get into store to watch and speak to category shoppers. Observing them either willingly or from a distance is a life line. Seeing what they’re buying and for what is a great framing tool. The relative quick return of the at home occasion opens up lots of possibilities and means the role of format can be considered, and potentially be the difference. You’ll need thick skin, seeing live rejection play out might sting a bit but can be actioned and even confirm which shopper segments you can ignore.
REFINE: CARVE OUT YOUR VALUE MISSILE.
The review stage will have sparked lots of discussion within the stretched team so addressing lots of things isn’t possible. Instead, shoot for the single finding that can create the most amount of value for the shopper, category or retailer. Maybe it’s a clearer role of the brand in the category, leading to a better category growth story which could see you experience the utopian moment of becoming un-substitutional to the retailer. Or smaller but important wins like upping the clarity around a usage occasion to give shoppers what they are looking for could be the way to go. This early value creation is vital for a scaling brand’s durability, and critical it comes from the brand. If this value proposition isn’t clear and compelling for the incubating retailer then they’ll set the tune, and that might not strike the right chord for the incubatee brand.
RECREATE: DRAMATISATION OF THE CORE VALUE.
Under a context of the average grocery shopper being exposed to 3,000 marketing messages per visit (and remembering 7) the retail comms face a battle to be seen, especially with the bigger noisy neighbours and the retailers themselves screaming value offerings. For these smaller brands tuneful humming is probably the best they can hope for right now. Being inspired by other categories, especially those with premium brands like beauty, or those with a commodity perception like hot drinks are good start points to see how similar challenges have been tackled. Smart retail design involves clear spacing from the competitor set, testing and optimising. Test different variants of message and/or design via the retailers’ online platforms or store estate, it will only help the anxiety levels when rollout happens.
While there were clearly easier times in the recent past for smaller brands to take their first steps in grocery these schemes are a huge opportunity, and from a shopper behaviour perspective there are some encouraging signs. A recent NielsenIQ study found that 46% of UK consumers are buying a greater variety of brands than they were pre-COVID, and almost 60% of these shoppers are prepared to spend more time instore searching for that perfect brand match. Good news for the little gems almost hiding in plain sight, especially as over half of the UK shoppers interviewed by NielsenIQ see these brands as more authentic and trustworthy, despite often being more expensive.
As these incubator schemes roll from one year to the next, they will get better and better at supporting the scaling brands by propelling them ahead of plan. But what they can’t do is to craft that value proposition. A leg up yes, but when it comes to grocery retail there are no shortcuts to getting your value story straight. With the Office of National Statistics reporting grocery inflation has risen to 16.5%, and the increasing value share of supermarket own brands value creation is the most important and really only immediate lever a smaller brand can pull for a sustainable future in this channel.
So, for those joining these schemes in 2023 give yourself a quick high five and then get back to finding and expressing proper value, not the stack it high and sell them cheap you’ll see next time you pop into store this Christmas to get that annual bottle of Baileys. If you can, then that scheme you worked so hard to get on will do exactly what it says on the tin - a platform to kick on from in the toughest channel there is.
