Advantage Solutions Investor Presentation Deck
June 2021, 9 slides
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outlook june grocery manufacturers and retailers forecasts and strategies for sales pricing assortment and digital commerce an out a advantage | Advantage Solutions
executive summary halfway into as much of the country is easing pandemic restrictions grocery industry players are focused on the nature of post pandemic sales optimal product pricing and assortment and return on their investments in digital commerce according to a new survey by advantage sales consumer goods insights team while product manufacturers and retailers hold significantly differing perspectives on likely sales strength in the second half of the year and where those sales will be made or in stores they are aligned in one area the transformative nature of digital commerce according to results of a may survey of grocery manufacturers and retailers by advantage sales manufacturers and retailers are far from aligned on dollar sales predictions six in manufacturers foresee increases in dollar sales through the second half of seven in retailers are predicting decreases manufacturers predict a much greater percentage of their sales moving over the next few years than retailers do while of manufacturers expect their dollar sales to be over by only of retailers believe the share of their sales being made will be that high the cost of consumer goods will continue to rise more than three fourths of manufacturers have taken price increases this year or plan to in the future retailers want sixty five percent of retailers are in the process of reducing manufacturers who are most affected are likely to lean into product innovation or promotions to regain lost distribution few retailers have plans to share their digital data this year only of retailers make their digital commerce sales data available to manufacturers now or plan to in the near future areas of focus in digital commerce are changing third party and are rising in importance with of manufacturers putting them in their top commerce priorities beyond their media spend at and target manufacturers top area of planned commerce investment encompasses basic capabilities such as content supply chain and data manufacturers believe there great room for improvement in their return on investment in retail platforms only of manufacturers believe a retail media network spend is extremely effective compared to their traditional spends with retailers regarding their overall digital spend beyond their investments in only commerce related investments with target and received extremely or very effective ratings by more than one third of manufacturers contents projecting sales and price increases reducing assortment and increasing fill rates investing in digital commerce and seeking roi methodology outlook june is based on responses by consumer packaged goods manufacturers and grocery retailers to surveys conducted may through may the survey and insights are products of advantage sales consumer goods insights team | Advantage Solutions
projecting sales and price increases as the cumulative effects of the pandemic on consumer demand and the supply chain come into focus manufacturers and retailers differ sharply in their predictions for sales and where they see those sales originating and plans for price increases nearly six in manufacturers surveyed expect third and fourth quarter dollar sales to be higher than last year however seven in retailers expect dollar sales to be lower for the rest of compared to last year results looking at sales across physical and digital shelves manufacturers attribute a greater percentage of sales made in the past months to shoppers ordering for pick up or delivery than their retail partners do they also predict a much greater percentage of their sales will be made by this difference may be attributed to manufacturers ability to sell their products on numerous platforms including and direct to consumers and barriers to cleanly identifying and measuring versus brick and mortar sales the cost of consumer goods will continue to rise about one fourth of manufacturers have taken price increases this year and another half plan to in the future the top drivers of price increases are a rise in the cost of materials distribution and packaging see charts next page second half dollar sales expectations percentage of dollar sales made last months projections for sales by | Advantage Solutions
manufacturers pricing plans plans for price increases drivers of price increase implications manufacturers should consider these divergent perspectives on dollar sales and price increases when entering negotiations and look closely at orders that fall short of perceived demand the effects of covid are spurring most price increases and manufacturers should consider complete transparency when presenting them to retailers those who expect a second round of increases should set the stage now better understanding why there a difference in perspectives on sales made through digital platforms will identify weaknesses in strategies and partnerships this is an opportunity for brands who will be more focused on sales to leverage their experience in driving commerce and help retailers achieve their goals for growth manufacturers and retailers differ sharply in their predictions for sales | Advantage Solutions
reducing assortment and increasing fill rates covid disruptions caused manufacturers and retailers to take a hard look at their assortments demand and out of stocks an examination that continues to play out on physical and digital shelves nearly two thirds of retailers are in the process on reducing their none who were surveyed plan to increase their count this activity has impacted the business of nearly three fourths of manufacturers who are most often turning to product innovation and promotions of those who are losing points of distribution or discontinuing items that have lost significant retail placements after a chaotic manufacturers are more confident than retailers that supply chain challenges will be resolved in the second half more than three fourths of manufacturers expect their supply level to be greater than by the last quarter of the calendar year but only of retailers anticipate fill rates to be that high implications with reductions on the minds of retailers brand innovation must focus sharply on category and closely align with shoppers new consumption habits and greater interest in a brand and product values and value equation while brands and retailers are focusing on the digital shelf brick and mortar assortment is still key as it will feed assortment for the near future when discussing sales plans reductions out of stocks and voids manufacturers should offer details of supply chain enhancements and fill rate assurances retailers plans manufacturers strategies for mitigating rationalization anticipated supply levels manufacturers are more confident than retailers that supply chain challenges will be resolved in the second half of | Advantage Solutions
investing in digital commerce and seeking roi the fast shift to grocery shopping and indications many consumers will continue to shop this way even as pandemic related health and safety concerns ease have manufacturers and retailers investing in digital commerce platforms and capabilities two thirds of retailers say a brand investment in their digital platforms are extremely or very important to the brand success just of retailers say these investments are not important to a brand success with their retail strategy indeed retailers say adding commerce and retail media strategies and spending discussions are at the top of the list of changes they be making to their joint planning sessions with manufacturers manufacturers are equally as interested in adding commerce plans to the joint business planning process by the end of the year even so a large majority of retailers are undecided about their plans for sharing sales data with the supplier community only of retailers surveyed said they provide this information to suppliers though another planned to make it available before the end of the third quarter plans for joint business planning retailers thoughts on manufacturers investments in retail media networks retailers plans for sharing sales data with suppliers | Advantage Solutions
outside of investments in media spends on and just under half of manufacturers say tier one retail media networks such as target and and third party platforms such as and are top areas of focus for current or planned commerce investments in fact of manufacturers say and are among their top commerce customers still beyond target and consumer goods makers are not convinced their investments in retail platforms are extremely or very effective one fourth or of the manufacturers making investments in other retail platforms rate them as extremely or very effective manufacturers commerce investments manufacturers return on digital investments top areas of investments or planned investments of general | Advantage Solutions
only a small fraction of manufacturers spending in search marketing digital content or retail media networks is coming from new funding sources only a small fraction of manufacturers spending in search marketing digital content or retail media networks or less is coming from new funding sources most manufacturers are paying for these spends with brand funds most frequently used trade funds and shopper marketing funds most manufacturers believe retail media networks are moderately effective spends compared to traditional retail trade spending implications retailers expectations are high for next generation joint business planning that includes digital shelf strategy and manufacturers should be prepared to talk about investments in retailers platforms and how best to show up on the flip side retailers should provide sales data to their suppliers and enable manufacturers to better measure the return on their retail media network investments through key performance indicators beyond return on spend as third party delivery platforms become a permanent fixture with grocery shoppers manufacturers must better understand the relationship these partners have with retailers and look to balance investments across both types of digital platforms while more attention is paid to marketing opportunities and manufacturers tap various funding sources for investments in search marketing digital content and retail media networks they should use data as it becomes available to more effectively compare their returns on each digital investment and traditional spend driving in store sales setting digital targets for sales and marketing may help ensure the right balance between in store and spends while retailers and manufacturers navigate the accelerated change in grocery retailing greater transparency and more forward thinking business planning is needed closer partnerships and mutual understanding may be two positives left in the wake of covid manufacturers funding for digital investments manufacturers perceived efficacy of retail media networks | Advantage Solutions
for more survey results and insights contact client services at net net net advantage sales | Advantage Solutions
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