Areas where CPG companies need to improve. Part 1

One of the great aspects about my job is that I get extensive exposure to a large number of companies.

I see up close strategic corporate initiatives from clients and see executive’s execution of their mandates from candidates.

I also receive 360 analysis from both clients and executives on what has worked and what has led to failure.

When mandates are perceived to not be realistic or when work life balance has been completely upset, I usually get a call from an executive that asks me for my help in exiting their company.

Most of the time, these frustrations in cpg are legitimate and not simply a senior executive who is underperforming and wants to leave a company before being dismissed.

With employee retention the number one concern for human resource departments this is obviously not an ideal situation.

As mentioned in past blogs, CPG margins are being squeezed, trade costs are rapidly increasing, private label has taken on a life of its own and input costs have increased significantly.

Companies have not produced their desired returns and as a result they have kept head count at a minimum.

Bonuses are harder to achieve and they are also smaller at all levels when compared to other industries.

The risk for losing good talent has never been higher within cpg.

In an effort to help companies I have listed some suggestions in how to reduce roadblocks in conducting business in Canada in order to minimize turnover at the strategic level.

These suggestions are based on my work with clients, candidates as well as my own industry observations.

This week I will focus on where tier 1 companies can improve their business practices in order to retain top employees.

1.  There should be a continuance to invest in analytics which speaks volumes to retailers but do not treat marketing departments as an unneeded luxury expense.

There has been too much focus placed on trade marketing which only services “push” marketing strategies.

This type of marketing limits the absolute marketing control of a manufacturer and allows the retailer to have too much control in how far the message is delivered.

More “pull” marketing strategies should be utilized using effective platforms and viral marketing.

These techniques are typically cheaper than the traditional avenues and retailers (regardless of size) want to avoid having desired products not listed in their stores.

This practice is also the best way to reduce the overall marketing budget costs as the manufacturer has more negotiating power to list a popular product at a lower than usual listing fee.

2.

The penetration of specialty channels is very weak for most tier 1 companies.

Their access to global products is second to none and more effort must be made to leverage this strength.

If it makes sense to import a container of unique product from another corporate global warehouse in order to gain customer commitment than the plan should be executed.

It not only strengthens retailer relationships but it also keeps smaller competitors out of those accounts who will not be able to compete with larger companies on both volume and pricing.

Retailers especially like having exclusive product so although it could mean more work to execute, it is a customized offering for the retailer which meets their objectives.

Do not rely on a U.S. head office to decide the fate of a Canadian opportunity that they might not even understand.

3.

The ability to develop products for retailers for private label or otherwise needs to be improved.

I am continually told about the frustrations of Canadians who are told by a U.S. head office that the volumes of a certain Canadian opportunity are too low to consider the business.

U.S. companies often don’t appreciate the small number of powerful retailers that exist in Canada.

Unlike in the U.S., losing volume at a retailer like LCL cannot usually be made up with

another retailer.

If the volumes are not acceptable for U.S. approval, then have the product co-packed in Canada in order to win the business.

It is a whole new landscape in cpg now where if a tier 1 declines business there is usually a tier 2 or tier 3 company ready to jump on that same opportunity.

This is a way to improve the overall relationship with the retailer and most importantly the company is not affected with operation capacity issues because the project is being outsourced.

This is how a company should be leveraging their global brand power.

4.

  I

f head office does indeed give the green light to an opportunity, the speed of delivery needs to improve.

I laughed when a VP of Sales at a large tier 1 company told me that a large retailer in Canada asked him for a product that they could launch in market in 6 months.

The candidate was told by his company that it would take close to a year to do the full due diligence on the opportunity.

The product was on market in 6 months but it was produced by a smaller local Canadian manufacturer who was much more nimble.

5.

Continue to reduce costs and perform sku rationalizations but make sure that brand vision is not clouded strictly by what sold well the previous

year.

Make sure someone is closely monitoring global trends, brand health indicators, and anticipated influences.

The stories of Canadians limited to

piggybacking on U.S. product momentum or companies assuming products will continue growing until witnessing a first flat-line year is beyond irresponsible.

6.  There also needs to be more talent introduced to cpg from other industries.

Recycling candidates for sales is understandable as many of these relationships are mandated by retailers but areas like innovation, social media, p.r. and partnership marketing should be open to non cpg backgrounds where fresh thinking approaches can occur.

Farewell,

Mike