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Beware of discounting and other advice from DCI's Business Summit


Distribution Canada Inc. held its second annual Business Summit in Toronto last month. Designed to provide the "latest trends and ideas within your industry and beyond," the half-day conference included research and insights on industry hot topics including promotional pricing, merchandising and e-commerce.

Here’s a glimpse at what we learned:

Growing the shopping basket
Maple Leaf Foods recently overhauled its line of bacon, hot dogs, ham, deli meats and sausages to include only natural ingredients. The food company's director, category management and customer insights, Chris Comeau, walked the audience through the brand's various stages of transformation from research to merchandising, but also offered ways grocery retailers can increase revenue.

Though he touched on the importance of increasing shopping trips and household penetration, Comeau's main focus was on growing basket size. "If you can do things to incent shoppers to pick up an extra item, those are the things that bring up your basket size," he said. Merchandising peanut butter with jelly, for example, and shampoo with conditioner.

Maple Leaf Foods had high household penetration on sliced meat, but low penetration on meat sticks and lunch kits. By placing those items close together you're exposing more people to the less popular product. "If one in 10 picks it up that's 10% growth," said Comeau. "So there's something really interesting to be said about understanding how people shop and correcting those adjacencies."

Pricing strategies need to be more strategic
If the industry isn't willing to raise prices, it needs to figure out how to increase margin and focus on profitability, said Carman Allison, vice-president of consumer insights at Nielsen in Toronto. Aggressively promoting a product can lower a brand's premium proposition in the marketplace. If bathroom tissue is half price, for instance, consumers stock up or become accustomed to the discounted price. "Good luck training the consumer to purchase it at regular price," he said. Promotions are an easy fix when sales are down, but 54% of promotions lose money, he said. Retailers and manufacturers need to do a better job of creating promotions that are mutually beneficial.

Big players can afford the e-comm game, independents continue to look for solutions
Walmart has plans to introduce click and collect in nearly all Canadian locations by the end of the year and is enjoying a lot of success in growing the online basket, said Mike Sharpe, key account executive at grocery retail consulting firm FMS. Walmart is investing heavily in online grocery because "it wants to be part of that basket and go head to head with Amazon." Independents aren't competing in e-commerce because nobody knows how to make money doing it yet, he said. "Loblaw is throwing darts out and hoping something sticks because they have the money to do it. A lot of independents are trying to figure out the best strategy to get in."

Sharpe also presented the top trends driving growth across the store:

  • Health and wellness: Very specific claims addressing specific health conditions

  • Transparency: Information on sourcing ingredients and production process

  • Convenience: Time-saving solutions from value-added to meal kits

  • Connected consumers: Increased researching and buying online

  • Premium-ization, while value seeking: Increased willingness to splurge on premium goods, while continuing to hold on to money-saving measures for others

  • One-size-fits-me: Increased thirst for customization

The day capped off with the organization’s gala dinner and Star Awards that recognized key partners, retailers and innovative products. Awards were handed out in six categories as follows:

  • Retailer of the Year -- Farm Boy

  • Partner of the Year -- Italpasta

  • Leader of the Year -- Giancarlo Trimarchi, Vince's Market

  • Lifetime Achievement Award -- David Powell, Atlantic Grocery Distributors

  • Innovation Award -- Galleria Supermarket for its magazine title The With

  • Social Responsibility Award -- Garden Foods for its work with a local food bank


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