What are the triggers of change for your Business?
So, the EU referendum campaign is over. Votes have been counted, the result has been announced, the UK is staying in the EU. That’s it then, the matter has been settled…
…at least that is what David Cameron and his advisors thought would happen when he made his Bloomberg speech in January 2013 announcing an in out referendum.
However, the UK is not staying, it’s leaving. And the vote has just been the start of it.
Within a few hours of the referendum result being confirmed, a series of events were triggered. First, the Pound and stock market started falling. Then, David Cameron announced his resignation. Then Nicola Sturgeon started paving the way for a second referendum on Scottish independence. Then Jean Claude Juncker was suggesting the UK need to move forward with a swift exit. Then a motion of no confidence was tabled in Labour leader, Jeremy Corbyn (at the time of writing – Monday morning – we are about 15 resignations down in the shadow cabinet).
The EU referendum has been the trigger for a whole series of events that will play out in the coming weeks, months and years. A lot of things will never be the same again.
So, why are we talking about this? Well, unsurprisingly, it got us thinking about the FMCG and Grocery world and how one trigger can set off a series of events, that can have big implications for the market. However, the big difference in our world is that there is rarely the seismic trigger, like the result last Friday.
In our world it is often what seem, at first, quite small triggers, that eventually have far reaching consequences. Think of them like David Cameron’s initial announcement of a plan to hold a referendum in 2013. People took a bit of notice of it, but nobody worried about it properly until, well for many people, until last Friday morning. And by that point, the chain reaction had already kicked in.
So, what are some of the potential triggers in our industry?
Legislative Triggers. For instance, health. We’ve probably only scratched the surface on this from a legislative perspective. A sugar tax on soft drinks is just the start. If your products are deemed to be ‘unhealthy’ you are likely to face a chain reaction in the future. Taxes? Loss of secondary locations in store? Rebalancing of range and space to ‘healthier’ products?
What do you do? Hope it doesn’t play out quite this way? Risky. Or get on the front foot now and adapt how you do things? Coke’s portfolio and marketing strategy is a good example of the latter – protect, and then drive, sales of Coke, not necessarily red Coke.
Consumption Triggers. For instance, on the go consumption and the need to provide on the go solutions. Many food categories are not fully playing in this area – biscuits, yoghurts? Or there are categories that are playing in this area, but are being challenged by changing consumption trends. For example, if you are a chocolate or crisp manufacturer, how do you adapt to the rise of coffee and coffee shops? The pull of coffee takes you into a Starbucks, Nero or BP Connect. And if you want something with it, it’s unlikely to be crisps or chocolate.
Channel Triggers. The proper foothold Discounters got in the UK market a few years ago is still being played out. Just look at some of the actions Tesco have been taking recently – range reset, introduction of tertiary farm brands, disposal of non core businesses. Who would have thought that the growth of Discounters would have resulted in brands such as Carlsberg being delisted from Tesco? And now Amazon Fresh are entering the UK market. A small initial trigger that could have far reaching implications – particularly for shopper expectations of what good and ultra convenient service is.
Promotion Triggers. Lots of brands have propped up their sales in recent years with promotions. Will this be as easy in the future? Some potential triggers are there – more talk of food waste, less or no multibuys, a refocus on everyday low prices. Perhaps shoppers really valuing, not just low prices, but the predictability of prices. We may even see two triggers coming together. Less, or no, promotions on ‘unhealthy’ products?
Some of these things may happen, some may not. For those that do, the initial trigger may be small. You might not pay that much attention at the time – like Cameron’s Bloomberg speech – but the chain of events that follow can be huge.
You can’t control them, but you can be better prepared for them. ‘What do we do if…’ is an important question to ask.
Not sure that many politicians properly asked that question in recent weeks. Let’s hope they find some answers quickly.
Feel free to forward. Have a great weekend and speak to you next week.