Sales growth in supermarkets depends on improving shopper experiences and growing categories, says the new managing director of Procter & Gamble New Zealand and Australia, Antoine Brun.
Price competition alone will not deliver lasting results, he says. "If you don't bring innovation to the market you don't get sustainable growth."
Adding promotions simply saw the competition do the same, whereas driving category growth involved convincing customers to spend more and delivering something they wanted to re-purchase.
The FMCG industry spoke too much about price only, he maintained. Retailers, distributors and brands needed to work together, with a more "consumer-centric" focus.
Shoppers expected efficient, uncluttered and more experiential offerings if they were not to take their dollar elsewhere.
"Retailers here have strong positions, but it is just a matter of time before others arrive," he told the Herald.
The P&G veteran moved to Sydney from Europe four months ago and spent last week familiarising himself with the company's $100 million New Zealand business. The set-up here differs markedly from Australia, where the once cosy landscape dominated by rival supermarket companies has been disrupted by the arrival of cost-cutters Aldi from Europe and Costco from the United States and the strong presence of discount pharmacy chains Priceline and Chemist Warehouse.
Online incursions are another issue, with Brun saying brands needed to ensure they were well represented across all channels. Within the supermarket sector, it was vital to better align media, in-store and online promotions to maximise their impact.
Brun said New Zealand shoppers were sophisticated, with strong environmental awareness, as expressed in an interest in naturals.
Supermarkets which recognised these trends would merchandise accordingly. The days of brands claiming blocks of shelf space for a big range of their products, were counter-productive to delivering what consumers wanted, being the convenience of shopping by categories, with, for instance, all natural shampoos grouped together for ease of selection.
Other lifestyle trends seeing a shift in sales patterns, included the casualisation of men's grooming. Shavers were now supplemented with trimmers, for the many men who sported second-day or beyond beard growth. Encouraging an up-sell, from say a basic razor, could be done with smart shelf displays. These would increasingly include "lift and learn" technology, where an explanatory video would be triggered when a customer picked up an item. Devices that gave a quick read of skin or hair type to help with product choice were also being trialled overseas.
A new Oral B electronic toothbrush the company is launching here, included connections that allowed for easy charging via smart devices. A phone-docking station provided bathroom multi-tasking.
"Consumers in New Zealand deserve the best innovation and they are ready for it and if we don't bring it, we shouldn't be surprised if they look elsewhere.
"We need to get out of that thinking that a small market doesn't deserve."
Brun says investment here is justified because while the New Zealand market is small, research shows strong growth potential in per capita spend.
After decades of presence, with brands including Gilette, Vicks, Olay, Ambi-Pur, Braun, Head & Shoulders and Pantene, P&G had decided 18 months ago to step up its investment here, he said.
Media spend had been doubled, mostly in television, and it had also brought in a new partner distributor, Diplomat NZ. This supply-chain specialist out of Israel, would bring a greater focus and long-term commitment to the local market, than having distribution overseen in-house, by corporate appointees who were often shifted to new roles internationally.
Diplomat had 35 staff here already and a mission to work closely with retailers. P&G was planning to use it to bring in new categories and expand existing ranges. With sales currently fairly flat - showing growth around 1 per cent across most categories - driving change was key to success. Early results from a focus on delivering greener Herbal Essence shampoos had been good, said Brun.
Tightly controlling inventory and supply were other essentials. Real-time digital reporting of stock on shelf was an exploratory technology that could offer much. As with all innovation, the costs had to be weighed against the benefits.
Brun said P&G was committed to a high global research and development spend, because it believed innovation was the way forward.
Internationally online sales now accounted for over half of P&G's total business, he said, providing connections to new consumers. But Brun isn't one if those predicting the end to bricks and mortar retailing. He reckons the psychology of shopping is such that consumers will still go into stores - if the environment is right.
"Shopping is also a pleasure, an experience, but customers want to find what they want anywhere, any time." The right products, good availability and well positioned was what would woo buyers. "In the future people won't care so much if it's a supermarket or a gasoline station or online."
The FMCG industry had to adapt to changing consumer demands. "I love that it's so fast moving," he says of the sector he has worked in for 22 years.
The Frenchman, who came to management from a sales background, is relishing being Downunder. His last posting was in Georgia. Getting to grips with country differences, ranging from the concentrated trade landscape of Australia to the less developed market here, is part of the job.
One bottom line remains: "We need to win everywhere."