Top 8 Impacts of HFSS on the SHELF

The premise is simple – HFSS brands that are prevented from driving sales through display or multibuys are going to rely more heavily on driving sales from the Shelf.  But what does this mean in practice?  Previously we’ve written about the HFSS Impact on Promotions here, and on Terms here, as both are directly impacted from the HFSS regulations. However, the most noticeable changes for shoppers will be at the shelf as investment by HFSS brands is redirected to everyday sales. 

The biq question facing retailers is how to balance sales growth against following the government agenda.  Tesco have stated publicly they want to increase the share of ‘healthy food’ they sell from 58% to 65% by 2025, can they do this and still find ways to drive highly profitable sales in ‘non-healthy’ categories?

The top 8 impacts from HFSS on Instore Merchandising are most likely to be:

  1. Mid-aisle Category Feature space
    • The categories most affected by HFSS such as Confectionery, Crisps and Cakes are likely to create an in-aisle feature bay (or half-bay) to allow brands to launch NPD and run promotions.  The footfall will be lower than in the main aisle so the uplift will be less, but any feature space is better than none.
  2. Listing of new ‘large’ packs
    • For brands used to promoting their 250g product on a 2-for multibuy – the obvious route around the ban on multibuys is to list a new 500g variant or 2x250g  multipack and run price discounts. This sticks to the letter of the HFSS regulations so it’s legal, but listing a range of large packs has a knock-on effect on sku count, range efficiency and operations.
  3. Greater shelf space allocation for top sellers
    • The best-selling skus in some categories can only stay on sale during promotions if they have extra space on display.  When display is not possible, they will need more ‘everyday’ space on shelf to stay on sale during normal promotions, or invest in daily field sales support for the bigger stores.
  4. Sharp Range Rationalisation
    • No surprise given the first 3 topics – but all 3 of them will reduce the space available on shelf for mid and small sellers.  NPD will be harder to list, and quicker to exit if it does not perform, and second tier brands will have to fight even harder just to stay instore. 
  5. Permanent Branded Gondola-ends
    • For a small handful of suppliers who have at least 1 or 2 ends on promotion per period across 2021, it may make sense to rent the whole end out in 2023 and keep the visibility permanently.  If the end is used for ‘everyday’ sales then it does not fall under HFSS regulations, but it is likely to fall into the ‘eye-wateringly expensive’ bracket.
  6. Strategic use of Seasonal and Power aisles
    • Easter Eggs in 2021 were sold mostly from end and shipper displays, and with listings in the seasonal & power aisles.  In 2022 their primary option in most stores will be just these two aisles – the Seasonal aisle will be even more competitive than normal, and the Power aisle is likely to default to HFSS categories more than usual as other categories can still use other displays.  The Power aisle has always been competitive, but for non-HFSS categories it will now be even harder than normal.
  7. Branded fixturisation on the main shelf
    • This is a tried-and-tested way to drive sales at shelf, but in Grocery the branded shelf fixture is only common in a few minor categories such as Beauty and Personal Care.  This is likely to change, which for most shoppers will be a good thing as the shelves become more interesting, provided they remain easy to shop.
  8. Permanent secondary site in adjacent categories
    • This is particularly relevant for Impulse snacks that sell by occasion  – think crisps in the beer aisle, or biscuits in the tea aisle.  The shopper proposition is simple, but these solutions have struggled to work operationally, as it’s difficult to list one product instore in two different places and manage stock effectively.  However, watch this space for a comeback, as the prize is significant for suppliers and retailers who can make it work.

While this covers a lot of ground, this list is not exhaustive and a corresponding list of online solutions exist as well.  There are also some quite ambitious ideas being considered at the moment – for instance Sainsburys could create a ‘Chocolate Shop’ retail brand and then give that retail brand a concession in the middle of every store. According to the letter of the HFSS rules this may be allowed – although of course it is a long way from the spirit of HFSS.  The challenge will be for brands to have the time and resources to work out the optimal approach for them by channel, and then collaborate hard with their retailer partners to bring this to life as the ‘new normal’. 

At Sellex we’ve found he best way to navigate this challenge is with a clear Category Vision that can set the strategic direction, both internally and externally.  A strong Category Vision allows brands to define the growth opportunities and then define the tactics best placed to deliver them, wrapped in a format that is compelling for retailers.  There’s never a better time to have a clear strategic intent than when facing watershed moments like HFSS.

If you would like to discuss how Sellex can help you develop a compelling Category Vision or manage the transition to HFSS regulations, please contact us using the button below: