WHAT IS FMCG?
The Fast Moving Consumer Goods (FMCG) is those goods, which are normally consumed by the consumers at a regular intervals. FMCG industry primarily deals with the production, distribution and marketing of consumer packaged goods. FMCG products usually have a shelf life, either as a result of high consumer demand or because the product deteriorates rapidly. Some FMCG products—such as meat, fruits and vegetables, dairy products, and baked goods—are highly perishable. Other goods such as alcohol, toiletries, pre-packaged foods, soft drinks, and cleaning products have high turnover rates. FMCG is probably the most classic case of low margin and high volume business.
Products belonging to the FMCG segment generally have the following characteristics:
- They are used at least once a month
- They are used directly by the end-consumer
- They are non-durable
- They are sold in packaged form
The prime segments of the FMCG sector include personal care, household care, packaged food and beve rages, Beers, Wines and spirits.
WHAT TYPE OF RETAILERS ARE IN THE UK?
Grocery (Super & Hyper Markets)
A grocery store is a retail store that primarily sells food. A grocer is a bulk seller of food. Grocery stores often offer non-perishable food, with some also having fresh produce, butchers, delis, and bakeries. Large grocery stores that stock significant amounts of non-food products, such as clothing and household items, are called supermarkets. Some large supermarkets also include a pharmacy and an electronics section, the latter selling DVDs, headphones, digital alarm clocks, and similar items. In the United Kingdom, supermarkets and convenience stores are sometimes described as multiple grocery businesses, or simply grocers.
A convenience store, c-store, small grocery store, or corner shop, is a small store that stocks a range of everyday items such as groceries, snack foods, confectionary, toiletries, soft drinks, tobacco products, and newspapers. Such stores may also offer other services or may have an in house Post Office. Many stores are licensed to sell alcohol, typically beer and wine. Since 2000 there has been a large move by the multiple grocers to open convenience stores.
Convenience stores usually charge higher prices than conventional grocery stores or supermarkets, as convenience stores order smaller quantities of inventory at higher per-unit prices from wholesalers. However convenience stores make up for this with the convenience by having longer opening hours, serving more locations, and having lower operating costs.
A symbol group retailer is an independent retailer that is a member of a larger organisation known as a symbol group. The symbol group retailer sector comprises all independent and multiple retailers who are affiliated to a symbol, fascia or franchise group.
An impulse store is primary for impulse purchases and covers many channels from convenience stores to petrol filling stations to CTN’s (Confectionary, Tabaco and News) stores. Any retail outlet that sells impulsive products, confectionary Crisps snacks and nuts to be a good example.
The customer can shop and order through the internet and the merchandise is dropped at the customer’s doorstep or an e-tailer. Here the retailers use drop shipping technique. They accept the payment for the product but the customer receives the product directly from the manufacturer or a wholesaler. This format is ideal for customers who do not want to travel to retail stores and are interested in home shoping. However, it is important for the customer to be wary about defective products as returning items is not as easy as a conventional grocery store. Examples include Amazon and eBay.
Online retail is growing ahead of the overall food and consumer goods market in many countries, UK is well developed in terms of both on line Grocery stores, to eBay and Amazon for non FMCG items. The smaller land mass / delivery routes make this more cost effective in the UK than some countries.
Wholesale (Cash & Carry, Delivered & Food Service)
Wholesaling is the sale of goods or marchandise to retailers for resale; In general, it is the sale of goods to anyone other than the final consumers. In the United Kingdom, the Cash and Carry is a term used to describe a wholesale warehouse where independent store owners come and purchase goods to sell. Some of these businesses sell to the public in return for an annual membership fee. The other part of wholesale is delivered wholesale this model is the same as Cash & Carry however the goods are ordered either over the phone or via the internet and then delivered. … Food service is similar to delivered with the exception of the customers are on trade or HoReCa (Hotels, Restaurants & Cafe’s) places where consumers consume the product on the premise.
A discount storeis a retail store which sells products at prices lower than the typical market value. A “full-line discount store” or “mass merchandiser” may offer a wide assortment of goods with a focus on price rather than service, display, or wide choice – such as Aldi and Lidl. There has also being a large rise in Pound stores, retail stores which only sell items for £1
WHAT SHARE OF MARKET DOES EACH OF RETAILERS HAVE?
IS THE UK MARKET DIFFERENT?
Most suppliers would agree the UK Market is very different to other markets. It is highly competitive, multiple grocers apply a lot of sophistication and category tools when ranging their fixtures which means it can be very difficult to gain listings without the right approach, then also maintaining the listings as the retailers expect quick success as ranges are regularly benchmarked for filtering out products that are not performing.
While total retail sales in main Stream Grocery are getting close to 80% of the trade (Excludes on trade data), some channels clearly over perform in particular categories such as confectionary (being such an impulse purchase).
Three major changes we have seen this decade are the rise of the multiple retail convenience stores, the rise of the pound stores located mainly on the high street and finally the growth in discounters Aldi and Lidl. This last trend has had a dramatic effect on the top 4 retailers and is changing the way they do business.
HOW SHOULD YOU APPROCH THE UK MARKET?
With a clear objective and a detailed plan on how to achieve this plan, based on very realistic assumptions. The UK market is reputed to be the toughest in the world, however get it right and the rewards are strong. So whether you are large or small, you have big plans or small plans get help! Ensure you have a solid well thought through plan, your consumer offering is good and you have researched UK consumer’s reaction to your product. You need a compelling consumer rationale, trade rationale why should the supermarkets believe in your product or plan and stock it, and a brand plan that will deliver success in the eyes of the UK trade and consumer. This is where we would strongly recommend getting UK help from a company like Premier Partners that can help you build this plan, refine it, strengthen it and get it ready, not only to approach UK retailers but also UK distributors. If you want the best distributor for your brand (including ourselves), you need to convince them you have a plan and package that is worthy of their efforts. Dependant on your plans and resources you can either approach the market directly or via a distributor, the latter is the route most companies take. Some then transition later once the business grows to a certain size to their own sales force and manage their brand themselves. There are many logistics providers in the UK that can assist with the direct approach, as there are also many distributors from very small to very large who can manage your brand. It is also recommended to have a UK representative to work with your chosen distributor very closely as gaining focus in the distributor is key to success. Remember: NO ONE CAN SELL YOUR BRAND LIKE YOU CAN!