Chris Cowan Of Kantar Worldpanel UK Shares His Data-Strong Insights On The Future Of Produce Retailing At The London Produce Show And Conference
Jim Prevor’s Perishable Pundit, June 6, 2017
Chris Cowan admits he doesn’t have a green thumb. However, he does enjoy dining on farm fresh produce and mining data to translate consumer purchase behavior into a competitive advantage for his clients. The latter is a great combination considering that for the past three years, Cowan has held the position of Consumer Insight Director at London-based Kantar Worldpanel UK, which has the UK’s largest consumer panel, comprised of 30,000 households.
The roots to Cowan’s current position started when he left Kantar’s sales division and joined its produce team. It was then, he says, he “met some interesting characters and was instantly hooked on the quirks and fun of working in the produce industry.”
Today, Cowan works with over 60 of the UK’s leading retail suppliers, ranging from multinationals to mid-sized family businesses, and gains a unique view as to how each operates, innovates and the challenges posed to these suppliers by retailers. Interestingly, as Cowan says, while two companies may supply the same specification of product to the same retailer, the questions posed by each to Cowan at Kantar are very different.
When he attended the first London Produce Show, Cowan says his network expanded to an international one and his work became even more fun. This, coupled with the fast pace needed to work with products with a short shelf life, is what Cowan says gets him out of bed each morning, into the office and crunching the numbers.
Pundit readers were first introduced to Cowan in November 2014, in the article, Kantar Worldpanel Execs Present Produce Case Studies Demonstrating Power of Data At the Global Trade Symposium Co-Located with the New York Produce Show and Conference. Here, he discussed decision-making by gut versus by data and provided several examples of why the latter is often best when a market is in flux. Then, the Pundit article,London Produce Show and Conference About to Commence, Brings Together Industry in Dialog, Highlight on Key Trends and Topics, previewed Cowan’s presentation, Working Together to Tackle Deflation. At the same time, the Pundit’s sister publication, Produce Business UK, published an interview piece titled, Kantar Worldpanel UK Warns of Lost Sales Value for UK fresh Produce, which profiles Cowan’s take on why fresh produce businesses should take note of the deflationary climate and ensure they truly understand their product and market.
This week, Cowan, as well as, Clive Black, Ph.D., head of research at London, UK-based Shore Capital Group Limited, and Jan England, managing director of England Marketing Limited, will be panelists at the London Produce Show’s Retail Panel Discussion: The Future of the Retail Environment. The panel will be moderated by Claire Powell, former Retail Operations Manager of fresh produce at Sainsbury’s, one of the UK’s leading retailers.
Consumer Insight Director
Kantar Worldpanel UK
Q. Let’s start out two years ago when you spoke at the London Produce Show about deflation. Could you recap what you’ve seen as the impact of deflation in the UK on the fresh produce sector since then?
A. Price is a big topic within the UK grocery market at the moment, and grocery inflation has hit 2.9 percent in the 12 weeks ending May 21, 2017. This means that the average household has spent an extra £27 on their groceries. However, encouragingly, we’re seeing produce volumes rise by about 2 percent in this time against a year ago.
Q. What has this meant to retailers and suppliers of fresh produce?
A. Being a bit of a data geek, I’ve looked extensively at the impact of changing price per kilo on produce categories, which allows me to also see the impact of changing pack size. In short, most produce categories that have increased their prices through 2016 have actually grown sales. It’s when categories lower their prices that the chances of success fall to about 50:50. Given that so many external factors affect shopper demand in produce — weather, availability in store, promotions on other categories as well as the habitual shopping behavior of many categories — it’s clear that price isn’t always the key consideration.
Q. What was your biggest take-home message from your 2015 London Produce Show and now, two years later, how would you update this message based on more recent research?
A. Back in 2015, there were supply issues helping prices come down, such as a stronger pound and good yields in certain categories as well as retailer-led price reductions. However, the shopper reaction was largely to continue as before which could actually hurt categories. Fast forward to 2017, and we’re in a period of inflation within the produce category but, encouragingly, we’re seeing more volume being purchased. For me, what has changed — and where the big winners will be – is in understanding how habitual and automatic people’s shopping behaviours are in produce. If shoppers are relatively automatic, then playing around with price will have little effect on their purchasing but, if their demand is strongly linked to price, then it’s more of a balancing tightrope act.
Q. Following up on this, in the 2015-published article in Produce Business UK, you’ve mentioned supplier responses to deflation are in three areas: 1) production efficiencies, 2) move into new areas like prepared meals and fresh to frozen, 3) consumer-centric rather than grower-centric strategies or really trying to get to know what customers want. Two years later, what have been the implications of these responses for suppliers, the supply chain and retailers?
A. I can’t comment on the production efficiencies, nor the specifics in which clients have looked. However, we have seen a real shift in demand across both fruit and vegetable suppliers in understanding their shoppers to an unprecedented level. Subtle changes in people’s shopping and consumption habits can lead to multimillion pound opportunities for retailers and suppliers.
Q. Can you offer an example?
A. One case of where this has worked to great effect is the berry category — specifically blueberries, where better year-round supply, combined with a compelling retail offer, effective communication on uses of this fruit and a reason to purchase, has helped make the berry category the largest category within produce at £1.21bn in the latest year — up 27 percent since 2015
Q. In the future, do you see discount formats continuing to lead?
A. We’ve seen that Aldi and Lidl have both made commitments to invest in new store openings, which will help them to continue the strong performance they’ve achieved. Their growth at a total grocery level in the latest quarter was the fastest we’ve seen since 2015. These two retailers now represent 12 percent of the British grocery market. However, we’ve also seen the main estate performing well for the major retailers, up 2 percent this year.
Q. Moving forward, will superstores like Aldi and Lidl continue to grow or will other types of formats emerge and overtake – and what does this mean for suppliers?
A. Going forward, I’d expect the continued evolution of the established retailers, investing in their own brand ranges, varieties available and in store experience. In any case, many suppliers work with numerous retailers, so they will also be aware of one channel winning at the expense of others. It may sound a touch idealistic but, for the continued success of produce, it’s about driving additional demand for categories by appealing to shoppers and consumers as to why the products deserve their spend.
Q. An interesting point you made in the article, Produce Central to Retail Growth, in the 2016 Produce Business UK Guide, published in June for the London Produce Show, is that Potatoes, Berries and Apples are leading categories, and that through a collaborative approach to finding the right price, other categories can become big sellers too. Could you give an example of the type of collaboration it takes to do this? Also, you give avocados as a good example of an item that has turned around.
A. Avocados are a particular favorite of mine, not just because I eat them but because it’s a great tale of the supply and demand sides working so well together. Avocados grew from £55m in 2013 to £164m in 2017 by attracting more shoppers to buy more often. Undoubtedly, the advances in delivering more ripe-and-ready avocados and the positive press they’ve received have helped, but why do I hold the avocado example so highly? Well, the category has managed to utilize social media, especially Instagram, to help drive demand at breakfast. The upshot? Over the past 4 years, avocadoes eaten at breakfast have grown 8-fold and an extra 18m consumer occasions.
Q. What do you feel are the next produce categories poised to make this leap?
A. That’s the million-dollar question. For me, it’s got to have a broad shopper base already (ideally 10 percent of the UK population buying into it over the year) and also a relatively low frequency. In terms of supply, it could be a seasonal market but, with expected demand growing quickly, sourcing will be key to help maintain interest in the category as it transitions from infrequent to nearly habitual/regular. Finally, and this is key, we need a reason to love it, and not because it’s cheap! For me, this sweet spot is where the next avocado/blueberry can lie.
Q. Lastly, if you could wave a wand like Harry Potter and change the direction of the force of factors affecting the fresh produce industry in the UK today – what would it be?
A. I’d want to see people working to engage shoppers more with produce. Not on every shopping trip, but take a step back next time you’re in any retailer’s produce fixture. Look around. It’s such a wealth of exciting, emotive reasons to buy that as soon as you head to one of the packaged groceries aisles, it’s lost. We know health is a rising driver of purchasing, and there’s a wealth of opportunity for produce to capitalize on, rather than simply making the categories cheap.
There are three issues Chris raises that are, indeed, food for thought:
First, he reminds us reducing prices often does not lead to increased sales:
“In short, most produce categories that have increased their prices through 2016 have actually grown sales. It’s when categories lower their prices that the chances of success fall to about 50:50.”
If you cut prices by 50% you have to increase volume by 100% just to be equal in monetary sales.
Second, he points out that in order for sales of an item to increase, you need people to eat it more frequently:
“Avocados are a particular favorite of mine, not just because I eat them but because it’s a great tale of the supply and demand sides working so well together. Avocados grew from £55m in 2013 to £164m in 2017 by attracting more shoppers to buy more often. Undoubtedly, the advances in delivering more ripe-and-ready avocados and the positive press they’ve received have helped, but why do I hold the avocado example so highly? Well, the category has managed to utilize social media, especially Instagram, to help drive demand at breakfast. The upshot? Over the past 4 years, avocadoes eaten at breakfast have grown 8-fold and an extra 18m consumer occasions.”
Note though that this boom for a particular item does NOT imply greater overall consumption of fresh produce. If the boom is caused by people abandoning the traditional English breakfast to eat Avocado Toast, then the win for avocados is at the cost of tomatoes and mushrooms.
Third, he identifies the prerequisites for a category to boom:
“…it’s got to have a broad shopper base already (ideally 10 percent of the UK population buying into it over the year) and also a relatively low frequency. In terms of supply, it could be a seasonal market but, with expected demand growing quickly, sourcing will be key to help maintain interest in the category as it transitions from infrequent to nearly habitual/regular. Finally, and this is key, we need a reason to love it, and not because it’s cheap! For me, this sweet spot is where the next avocado/blueberry can lie.”
This suggests that the search is not so much for completely new items but for something, such as a health report or effective marketing, that can make demand for a known item jump. Though, again, this speaks to growth in an individual category — not in overall consumption.
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