The fact that promotions will be limited in scope and limited in presence will make compliance, execution, and on-shelf availability more important than ever.
Next year’s regulations around the placement and promotion of High Fat, Salt & Sugar (HFSS) food and drink in England will create a significant destabilization of store operations and economics for supermarkets and a raft of challenges for impacted suppliers (plus a wealth of opportunity for non-impacted brands).
Although promotional intensity has moderated in the UK in recent years, the UK market is still more reliant than others on promotions and, combined with the fact that a disproportionate amount of promotional space and prime retail real estate are devoted to HFSS products, the incoming legislation will be profoundly impactful.
The new rules will outlaw the placement of HFSS products at store entrances, aisle ends and checkouts and their online equivalents (homepages, landing pages for other food categories, and shopping basket or payment pages) and will prohibit retailers from offering promotions such as ‘buy one get one free’ or ‘3 for 2’. Non-volume promotions, such as ‘half price’ or ‘25% off’ will still be permitted.
The rationale behind the new legislation is that volume promotions of HFSS products and the placement of them in key parts of the store leads to increased consumption of these products, thus contributing to various health problems such as obesity.
The intention is that replacing HFSS products in key store locations with healthier items (products that are lower in calories, saturated fat, salt or sugar or higher in fruit, vegetables or fibre) will swing spending towards the healthier alternatives and help decrease the population’s consumption of calories, sugar and salt.
For the suppliers of HFSS brands, these regulations will inevitably be something of a body blow. With the ability to create impulse buys at the front of store, on gondola ends, at checkouts and on FSDUs set to evaporate, and with the option of using highly effective volume promotions denied to them too, the variety of promotional mechanics available to them will very limited.
The fact that promotions will be limited in scope and limited in presence will make compliance, execution, and on-shelf availability more important than ever, meaning that tools such as Retail Execution and Trade Promotion Management will be essential for HFSS brands to ensure that their promotions are performing as strongly as possible.