What do supermarket buyers look for in new brands? Sainsbury’s, Co-op and Morrisons weigh in
The COVID-19 pandemic has increased competition on supermarket shelves, as panic buying and stockpiling forces retailers to increase focus on ‘essentials’.
However, category buyers are well and truly still on the hunt for new and exciting brands, delegates were told at start-up event Bread & Jam last month.
“Delivering distinctive and exclusive products and categories is a key part of the strategy at Sainsbury’s, and this hasn’t changed as a result of COVID or Brexit,” said Future Brands Origination and Development Manager at Sainsbury’s Rebecca Miller.
“So genuinely distinctive brands are one of the ways we’re going to deliver this. And this often comes in the form of new and small suppliers.”
What exactly are the big names in retail looking for in young brands? And how has the pandemic altered their outlook?
Larger trusted suppliers vs smaller agile start-ups
When coronavirus first hit the UK, supermarkets were stripped of staple products: from pasta to flour and of course, toilet roll. Frozen foods have also experienced a boom in recent months.
With empty shelves and logistics systems under unprecedented pressure, it would be easy to presume that the big names in retail sought extra supplies from the big names in food.
However, according to Sainsbury’s Miller, this was not always the case. One reason for this lies in exclusivity requirements: the retailer asks Future Brands for a minimum of 12 months brand exclusivity from its main competitors, notably Tesco, Asda, Morrisons, Aldi, and Lidl.
“The larger, trusted suppliers are not normally willing to work with Sainsbury’s on an exclusive basis,” she explained. “So even if some of the buyers may want to fall back on some of the larger, trusted suppliers, my job is to show [the buyers] all the amazing smaller brands coming through.
“The great thing about these new, smaller suppliers is that they are able to adapt to a quicker pace than larger FMCGs.”
The Future Brands expert continued: “It’s not a case of just falling back on large suppliers, there is definitely still opportunity for new and smaller suppliers.”
Darren Smith, who heads up Local Sourcing and Ranging at Morrisons, suggested that consumers have not in fact been more exposed to larger brands this year – to the contrary.
“Customers are being more exposed to local products,” he told delegates at the event. “They’ve either turned to shopping locally – so they may well have turned away from some [big] retailers…and that has put them in front of more brands they may not have seen before.”
Smith’s ambition is to bring local brands back into supermarkets.
Concerning supplier trust amid the pandemic, Smith said the retailer ‘really trusts’ its small suppliers just as much as its bigger names. “They are very agile and they really move quickly to adapt to things that change.”
When products were flying off the shelves earlier this year, Morrisons turned to its smaller suppliers. They ‘really took on that challenge’ of plugging gaps in supply, he recalled, “they came to the rescue”.
Similarly at Co-op UK, where Richard Dennett is the Buying Manager for Bakery and Local, the category was ‘incredibly challenged’ at the height of the pandemic. “Local suppliers came to our rescue…it just goes to show how incredibly agile some of these smaller suppliers can be.”
Who should new brands be targeting?
Gone are the days of customer loyalty. Big supermarkets don’t have a ‘typical shopper’, according to the panel, who agreed that ‘shoppers are increasingly disloyal’ and ‘shop in a big range of retailers’.
So while it is no longer relevant to find products for a ‘Sainsbury’s shopper’ or a ‘Morrisons shopper’, their category buyers did say there are specific groups within their customer bases looking for new and exciting brands. And these are who start-ups should be targeting.
At Sainsbury’s, where 70% of the UK population shop – with 42% aged between 45 and 64 years, and a 66% majority female – Miller said its Future Brands customers have ‘slight nuances’.
“They’re more likely to be a big regular shopping [customer] and more likely to be a Platinum shopper,” she said, referring to Sainsbury’s highest level of loyalty. They’re also more likely to be ‘foodies’ or ‘on-trend chefs’, she continued.
“So with regards to the customers that brands should target, they [should bring] anything that is going to be a ‘bit different’, that is going to offer something customers can’t get already.”
At Morrisons, where around 15m people walk through its doors every week, again there is no ‘typical shopper’. It’s about ‘making things easy’ for shoppers and catering to their shopping mission, Smith told delegates. And it’s not, he continued, all about bricks and mortar.
“We are absolutely looking at things through a multi-channel lens now,” which he said includes digital offerings as well as wholesale via Nisa.
Co-op UK’s Dennett advised potential suppliers to not only understand how each retailer categorises their customers and segments, but to remember that geography will also play a role in where new brands listings land.
“We’ve got stores all across the UK. So a young family that shops on the south coast, or in Scotland, will be different to a young family that lives in central London.
“There is so much that goes into it. Because we have such a big geographical spread, such a big customer base, it’s really important to know who your customers are…but we don’t just have one type.”
Up-and-coming trends
So what are the key trends new brands should be tapping into? Where is there excitement and keen interest from both customers and buyers?
At Sainsbury’s, Miller said delegates would not be surprised to learn that plant-based is still a hot trend. Yet the retailer wants to shake up this category, with the Future Foods expert suggesting another plant-based burger may no longer make the cut.
“We’re looking for something that is differentiated, rather than another variant of an existing product,” she explained.
Functional health is also ‘massively growing’, she revealed, with areas such as sleep becoming a ‘big growing trend’, along with mindfulness and gut health.
Dennett said health and wellbeing is also high on the agenda at Co-op UK, across all categories. He revealed the company is ‘potentially’ looking to amplify its focus on the trend, and noted that similarly to Sainsbury’s, vegan products have performed well for the company.
Elsewhere, Co-op is exploring options for kosher foods, which it currently doesn’t offer to its customers.
So if a young brand has a distinctive product that aligns with an up-and-coming trend, how well established should it be before approaching one of these retailers for a listing? How important are an existing customer base and a healthy social media following?
Sainsbury’s Miller said she askes new brand if they have any proof of success so far. This helps her gauge whether customers will buy the new product and whether there is ‘some sort of appeal’ for the offering.
At the same time, it depends on the product, she stressed. But if a new brand has a listing in 10 different independent stores, Miller will want to know about it, “just to [determine] what is the appetite for this product…It’s definitely something I look at.”
Over at Co-op, Dennett said having an existing customer base and social media following is ‘preferable but not essential’. “It’s not actually a prerequisite,” he told delegates. “We’re looking for things that are genuinely different, that have a USP.”
