The challenges facing the food and beverage industry in 2022 continue to add up. The cost of inputs are rising to unprecedented levels, labour is a question mark in many sectors and regions. Predicting volume of every item is not for the faint of heart.
We know people have to eat and that retailers are looking for reliable supply of products and they would prefer that they are produced in Canada. It is a positive when there is demand so we need to determine how to satisfy the demand and position producers for a strong future. As we look forward to the 2022 growing season here are five ideas to help you maximize the opportunity with your customers.
1. Determine what you can do and what you want to do
If you are finding it difficult to find people to work in your business, chances are retailers are facing the same challenges. As you build your plan for this year use the facts you do know to build a realistic plan. This should be a balance between what you can do and what you want to do. The strain of the pandemic seems to be wearing people down and you are more likely to accomplish what you want to do.
Every year is different, but this seems to be shaping up like no other. Assess your ability to get the inputs you need from seed to the final shipping carton.
2. Figure out what it will cost
It is not only difficult to get inputs and labour, but they also both cost more. Your customers will need to understand the position you are in and what items will cost.
Often, we would look to the previous year and history to figure out product costs. You really have to go back to the drawing board right now to understand the true impact of increased costs of inputs. Wherever possible, push back on cost increases and consider options. I am sure you are doing this but remember to share your efforts and findings with your customers. When they know you are trying to keep costs in line, the tone of the conversation should change.
3. Consider pricing options
This might be a year to consider a different pricing model. Your customers will always negotiate price, but they are also in a position they are not familiar with. They need suppliers who have a dependable supply of product. Retailers are not used to having empty shelves and if there is one thing they would all agree on, it would be that no inventory results in no sales. In many stores, produce is the first department consumers see and if the shelves are empty, it sets the tone for a bad shop.
One option to consider is contract pricing. You determine in advance what you need to produce and pack your crop and agree on the price with your customers before the season. This will give you peace of mind to enter the season knowing if you can get the crop produced, within specs and standards, that you will be paid enough to have a successful year. There are enough uncertainties right now so a price that works can reduce some of the stress.
Another option is to propose some form of reduced rebate with your customers when you are able to produce the amount of product they are looking for. Obviously, this is not something they would have considered in the past, but they need product in their stores. A slight reduction in rebate is a small price to pay for the efforts growers need to put in to produce crops in these challenging times.
Once you assess your options for pricing, you will need to have a plan to discuss pricing with your customers.
4. Meet with your customers
We know there is a lot of uncertainty and retailers are feeling this too. They do need to have a plan for the season and they want to work with suppliers who have a plan. During my years working on the retail side I would always have much more respect for suppliers who came in with a plan.
Yes, it is the retailer’s store, but they want to see your vision for the year and how you will deliver. Your plan should start with volume and what you see for the season. For some crops this will need to be broken down by week and others by month. This really depends on the volatility of the product and the length of the season.
When you do review volume, ask them if the numbers you have are what they see for the year. This is when you need to stop talking and let them answer the question. Too often I hear suppliers share a number then just keep on going. It is one of the most important numbers in your relationship so take the time to ensure you agree. If there is a gap, work through it to get to a number you can agree on.
Discuss any other opportunities or obstacles you see when you were building the plan. Given all of the challenges in the market it can be refreshing to consider opportunities right now. We do see people moving ahead and introducing new items or packaging.
5. Communicate during the season
No news is not good news. Regular communication is a good thing and should lead to strong, prosperous relationships. Plan the communication with your customers and do not leave it on their schedule. They are busy and they will gravitate to the problems, which is natural. If you are delivering your plan, you still need to communicate with them.
As you build the plan, start early. Seasonal transitions are always important in the retail business to ensure the right amount of stock is available at the right time. Your customers need to know what is happening, even if it is just going according to plan.
As you get into your season, find the most effective forms of communication. This can be phone, email, text or any other form of communication that works! It might be a combination of options and perhaps even time of day. It is part of your job to make sure they know what is happening. A strategy of no surprises is a good one. You might also find other people within the retailer’s organization to communicate with. Category managers are busy and there are other people to talk to.
Maximizing your opportunity requires more than just producing great products. Putting the work in ahead of the season and during the season to communicate should pay dividends with your customers. Suppliers who are able to do what they say they will do are more valuable than ever.