Consumer goods manufacturers not only have to adapt their sales forces to recent changes in the retail sector but to a difficult economic situation as well. How do you optimize the presence of your teams in the field when inflation and international tensions are reshuffling the cards?
In mid-2021 everyone was hoping for a V-shaped recovery from the Covid crisis on the back of a resumption in household consumption and the “final” recovery of supply chains disrupted by the pandemic… Nothing happened in the way it had been anticipated and the consumer goods sector – food, hygiene-beauty, domestic cleaning and upkeep – now has to come to terms with two realities it would very much like to have done without:
- more expensive energy and raw materials, exacerbated by the war in Ukraine;
- inflation rates that are piling pressure on household purchasing power.
In this difficult context, negotiations between the consumer goods manufacturers and the mass retail sector have unavoidably become tougher, the former needing to pass on the price increases they are suffering from while the latter are attempting to contain prices for consumers while sparing their margin. This situation is requiring the sector’s manufacturers to step up their efforts to cut costs at every level, which could be at the expense of sales forces in the short term.
Are consumer goods sales forces set to contract?
In the fourth quarter of 2021, 30% of national consumer goods-self-service fresh food sales directors questioned by B&B Market* were planning to expand their sales force in 2022, which already represented a slowdown compared with the 12 previous months (36%), the predominant trend during this period having been a standstill in team size. The current deterioration in the economic situation suggests, at best, a flatlining in sales force numbers over the next 12 months and, at worst, a reduction in the salesforce.
This probable development challenges the organizational model adopted by consumer goods manufacturers in their efforts to adapt to the growing number of sales outlets that has characterized the mass retail sector for more than a decade. Conventional hypermarkets and supermarkets, which account for more than 70% of the consumer goods-self-service fresh food brands’ turnover (source: LSA-Iri 2021) have been joined by:
- short channels, representing 10.8% of the consumer goods-self-service fresh food turnover (source: LSA-Iri) and that 70% of the national sales directors questioned said that they employedin 2021. It should be noted that 66% covered this channel using a dedicated sales force, often made up of apprentices;
- Click and collect, whose activity has been boosted by successive lockdowns and whose success is undeniable. In 2021, 80% of sales forces were visiting collection points, massively concentrated (95%) on the Leclerc network, and 42% of national sales directors wanted to extend their coverage to other brands’ networks in 2022.
Companies in the sector also need to incorporate in their strategy the recent emergence of the quick commerce distribution phenomenon in major built-up areas.
While hypermarkets are losing ground in terms of consumer preferences, and brands are trying to make up for this lost ground by keeping prices low and diversifying their distribution channels, the question today facing all consumer goods sales forces more starkly than ever before is: how do you visit an ever-growing number of stores with the same number of area managers (AMs), and potentially fewer?
Doing more with less, the eternal sales force challenge…
In the power struggle with the mass retail sector, the question is not framed in quite the same way for the sector’s large consumer goods groups and its SMEs. Even after downsizing, a large group’s salesforce will remain sufficiently well-resourced to maintain national coverage without excessively increasing its area managers’ portfolios. Transitioning from a headcount of 300 to 250 salespeople for 4000 or 5000 stores on the HMSM circuit is not insurmountable and enables a good visit frequency to be maintained, notwithstanding the greater time spent in store on operational tasks.
>> According to our 2021 study, these tasks are performed by AMs in 50% of cases. In sales forces which include sales promotion staff, 42% of them are occupied solely with operational tasks. If the remaining 58% combine operational tasks and negotiation, then they spend 65% of their time on performance. As the probability of stores increasing their headcount is less than low, this trend will not be reversed any time soon. The weight given to task performance and timetable constraints (flexitime, overnight stays…) associated with it can have an impact on sales force retention in groups already faced with high turnover.
>> It would therefore appear to be more important than ever before to calibrate sectors to ensure that the workload is shared not only between salespeople, but also in terms of content to maintain interest in the positions they are offered.
Doing more with less is always trickier in SMEs with sales forces of only a few dozen salespeople. Parting company with just a few salespeople to get through a sticky patch requires them to make even more radical trade-offs in terms of territorial coverage and, consequently, portfolio size and structure.
>> Given the context, SMEs that are compelled to trim their sales force will have to concentrate more than ever on those areas and channels where they are already well established to consolidate their positions and defend their turnover.
>> With this prospect in view, the “white areas” strategy, namely areas that are deliberately not covered, is often the best decision for small sales forces. Despite that, they still need to be able to determine rationally which areas can be “abandoned” without undue harm and to optimize the segmentation of the territory to be covered depending on the number of salespeople, the number of stores to be visited, their location, and their individual turnovers.
Irrespective of the size of your sales force, good territorial segmentation is an indispensable starting point for intelligent territorial coverage and for enabling your sales staff to achieve their visit frequency, digital distribution, share of shelf, promotions and, of course, turnover targets.
>> Supporting consumer goods sales forces in this strategic approach is the B&B teams’ core competence. It is also the raison d’être of Nomadia’s territorial segmentation software products, which enable both national and regional sales directors to develop their territorial segmentation based on the priorities/constraints of the moment, and on their headcount.
Maximizing the number of visits
As in all sectors, the consumer goods sales forces’ “useful and profitable” time is the time sales staff spend with their customers, in the event store directors and shelf managers. The more they meet them, the stronger the relationships are, and the more chance they have of ensuring good visibility for their brands products, of avoiding stock-outs, of obtaining promotional space, and making promotion activities more impactful. Unfortunately, they are all continually on the go and struggle to organize their days to ensure the maximum time possible with their contacts and in the store, while visiting stores as much as they can every day.
>> According to our study, in 2021, AMs made 4.9 visits per day on average for an average portfolio of 85 stock keeping units (SKUs). One third of sales forces were below this average with between 3.5 and 4.5 visits/day, and one third above it, on more than 5 visits.
>> All the national sales directors questioned are looking to shorter visits to increase the number of visits per day and per AM. The increased demand for operational tasks does not really take us in this direction… Moreover, the number of possible visits in a day is directly correlated with the number of references to be managed in each store. It goes without saying that if your AMs have 10 or so products in just one category, their visits will be shorter than if they need to manage 150 references over 4 categories. In the first case, a typical hypermarket visit will last 30 minutes, against 90 minutes in the second case. The target number of visits per day can scarcely be the same!
Give salespeople the tools to be efficient
To increase the number of sales visits per day and enable sales staff to cover their portfolio with a good frequency, not only do their geographical sectors need to have been well conceived in advance, they also need the tools for:
- rationalizing their daily routes to minimize travel time between the stores being visited. Lower mileage thanks to more efficient routes translates into less fatigue and lower fuel consumption, which, given the current price of fuel is not to be sniffed at from an overall cost reduction perspective. It also means lower CO2 emissions.
>> Nomadia’s route optimization solutions enable AMs and promoters to create routes that take account not only of these journey distance and time parameters, but also of the company’s strategic priorities, and the sales staff’s individual objectives. An optimized route can therefore bypass certain stores with a lower turnover potential, notwithstanding in principle being well located geographically for inclusion in the route.
- spending less time on administrative tasks. The national sales directors questioned in our survey estimate that their salespeople spend more than 1hr 30 a day on administrative tasks. 64% acknowledge that their sales force has no dedicated time window for these tasks. That means that visit reports, making appointments and organizing routes are not really considered as working time…
>> The sales teams’ extra administrative burden problem mainly comes down to tools. The tools they are provided with are not always business-orientated and are frequently ill suited to mobile work situations. To cover all the tasks to be performed (weekly schedule, preparation of appointments, shelf surveys, reports, activity management…), sales staff are having to juggle several tools, their major drawback being that they are not interfaced with one another. The result is a waste of time, efficiency and… motivation!
>> It is perfectly possible to reduce the time spent on your salespeople’s administrative tasks by equipping them with a mobile business application enabling them to do everything, not only within a single interface, on a tablet computer or mobile telephone, but also directly in store. Our SOLVNet application enables your sales forces to manage their day-to-day relationship with their customers, gives them access to all the information they need to prepare their visits and their routes, and has all the necessary features so that they no longer need to do at home, in the evening or at the weekend what they can do in store.
Because the economic situation is complicated, because cost control is more topical than ever before, consumer goods manufacturers must be able optimally to redeploy their sales force and give it the wherewithal to work efficiently on a daily basis. Whether you have a problem with territorial segmentation, the practical organization of your area managers’ routes or managing store operations or salesforce CRM, our experts are on hand to advise and support you.
* B&B – Nomadia Group study, conducted between 13 September and 8 October 2021 involving 71 National sales directors from the consumer goods-self-service fresh food industry