The space battle

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The annual trading agreement has been slammed as a barrier to sophisticated category management. Retail News investigates the growing toll.

The industry is warning of a toxic mix of rising commodity prices and falling profits now rampant in the Middle East's FMCG sector, however retailers and suppliers should rally together to maximise category value.

"If retailers and brand owners see the consumer as king, this needs to be reflected in category strategies mirroring consumer purchase behaviour. This will become the cornerstone to category initiatives and lead to full-scale category management.

Mark Tully, founder of Dubai-based competency solutions provider Gameplan, is adamant that such steps will improve category performance substantially and result in superior customer service.

"I think a key point to be embraced by retailers and manufacturers is that purchase behaviour is being influenced by merchandising. Current business practices are influencing the consumer.

"In some instances, these will be positive, but in others these will actually negatively influence the consumer and hinder category performance."

Merchandising is an arena in which retailers and supply partners interact for considerable amounts of time, however the approach to shelf layout and ranging in the GCC has been swayed to the extreme by the annual agreement, which is perceived by some professionals as an overpowering obstacle in the fight for innovation and added value products.

Compared to other developed retail markets globally, the method employed by Middle East players is best described as ‘traditional'. Sophistication and strong category management cultures have permeated in other markets, and in turn harvested real improvements for retailers, suppliers and consumers, with the latter group impressed by enhanced quality, service, availability, value for money and functional benefits.

Leading GCC dairy company Al Marai has continually pledged its commitment to driving positive change. David Cochrane, the company's divisional trade services manager, says positive change within the food and beverage industry will fuelled largely by effective merchandising and category management behaviour tools.

"This is great news for all consumers as they will be able to enjoy all the added value benefits these successful techniques will deliver.

"Developing new category and product solutions based on consumer understanding will become essential to ensure that both the retailer and manufacture will continue to grow effectively together, enabling future investment opportunities to generate more innovation and smarter added value functional solutions.

According to Tully, successful category, brand and range strategies are built around the consumer, and these consumer-based plans and activities will create sustainable profitable solutions.

"The supply partner who brings category-based thinking and plans, supported with tangible consumer, market and performance insights, is bringing the potential for far more value to the retailer.

"This approach becomes far more strategic, long-term and sustainable, and has the potential to build strong powerful relationships and mutually beneficial business agendas to influence future consumer decision-making.

Tully explains that category-based merchandising fronted by insights into the market, consumers and performance are beneficial to retailers as:

The developments should have a further spiral effect in the form of increased frequency of purchase, increased weight value of purchase, and the opportunity to leverage trial and unplanned purchases, unquestionably outputs which are equally advantageous to retailers and supply partners in the Middle East.

Successful merchandising appears to have shot up as a crucial component for retailers as it enables them to engage shoppers with their fixtures and encourage incremental and impulse purchases through the use of eye catching and emotional in-store marketing.

Shoppers can navigate their way around the category if retailers use ‘beacon' brands to denote sectors and keep merchandising simple and neat, and put simply, merchandising attracts the attention of consumers as they walk down a supermarket aisle.

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