The maker of Heinz beans has warned that supermarkets are in danger of becoming too “manicured” and reminiscent of “libraries” as bosses seek to streamline aisles and reduce promotions, at the expense of exciting customers with in-store marketing that will “break the autopilot” of the shopping experience.
Changing consumption habits as well as rising concerns around things like sugar has led Kraft Heinz to believe that, despite the pressures of Brexit, coming up with new products is the “life-blood” of the company. In recent months, this has seen it introduce things like Aioli Mayonnaise, Korean Barbecue Sauce and continue to invest in 'low sugar' variants of its most popular brands.
But, it’s facing increasingly high barriers to get these new products in front of shoppers. The likes of Tesco and Sainsbury’s are not only curbing the vast array of goods they stock and – even if Kraft Heinz does convince buyers to pick up new product lines – they are reluctant to clutter aisles with in-store advertising that would promote anything new.
“Innovation is helping us keep our categories relevant to the emerging needs of consumers, but it’s a tough moment for innovators as retailer’s reset and rationalise,” said Matt Hill, president for Europe, Kraft Heinz at the IDG’s Big Debate in London today (18 October).
While Kraft Heinz is pruning its own ranges, “placing fewer and bigger bets”, Hill called on retailers to not lose focus on innovation in their drive for efficiency.
“There has to be scope for creativity in-store and in-store executions that will get cut-through. Our challenge is to create real theatre that will interrupt the autopilot – these environments are more enjoyable, surprising and stimulating,” he said.
“There is a danger that in the drive for efficiency and strict merchandising policies that creativity will suffocate. Clean aisles with perfectly manicured selves leave shoppers on autopilot.”
For its part, Kraft Heinz said it is trying to bring retailers into conversations earlier in the innovation process to “get early buy in” for the in-store execution of new product launches.
“We all need to be more cost efficient with the cost pressures on the industry, I understand that completely. But creativity sells. There needs to be a place in store to engage and surprise,” added Hill.
Also speaking at the conference was Matt Davis, UK chief executive at Tesco, who responded to Hill’s request by saying simply that its range reset is about “supporting the way people shop in a simple way” and pointed to its most recent quarterly earnings report as an indicator of its success in that strategy.
This issue seems to add to the friction between what suppliers like Kraft Heinz want and what supermarkets are prepared to give. Last year, The Drum outlined how the buying managers at major supermarkets were holding FMCG companies back from how quickly they could invest marketing budgets into digital and other emerging channels because they're only interested in seeing TV on media plans.