I had a boss once that loved challenging our team to grow our business to think big and “Make a mountain on a mountain.” In one very easy-to-understand statement, he recognized the prior year’s good numbers, next year’s challenges, and empowered the team to get it done. The idea of “making a mountain on a mountain” is exactly what is in front of many of us in 2021. COVID created a once-in-a-generation sales lift for many retailers we hopefully will never see again for similar reasons. Research from Deloitte shows retailers carrying building materials, sporting goods, food and beverages, books, music, and other recreational items grew sales significantly amid the pandemic last year, some up over 17%. Many retail suppliers experienced the same downstream benefits of this growth. But as many of you know, the waters we are now operating in are not calm. With the myriad of supply chain, labor, and costing issues the market presents, the struggle is real. Some people with 30+ years of experience in consumer goods have told me they have never seen all these issues come together simultaneously. But as my boss used to say, we all need to build a mountain on a mountain.
Over the last 180 days, as a part of this chase for comp growth, we have been focused on making sure we are maximizing inventory readiness with our client partners. We started by working with our retail partners to understand how they see 2021 playing out. This has not been easy as everyone’s crystal ball is a little hazy right now. After all, this is the first time a situation at this scale has presented itself. But understanding how retailers see the future is important. After all, our retail partners are setting sales budgets that bonuses and quarterly earnings reports are eventually tied to. The budgets are enormously valuable information to help understand what level of growth over last year our partners are expecting and need their suppliers to be ready to support. Getting this information is not always as easy as it could be; some merchants feel this is top secret information they should not be sharing. But without this information, it can be challenging to build the bottom-up forecast to feed manufacturing plans. After explaining the need for this information, most of our retail partners have been willing to provide specific or directional guidance. This has been a tremendous asset in planning inventory levels and safety stock.
Outside of the operational focuses, we are also focused on incremental sales opportunities. Our priority has been on how to sell more of what we already have. This means starting with the items currently stocked in a planogram. There are several levers we have pulled to help existing items in existing formats grow the sales forecast. This, too, has not been easy. After all, it can be easier to think about incremental off-shelf opportunities with incremental items. It is sometimes easier to get manufacturing organizations more excited about new items and merchandisers. We have had to go item by item, lever by lever, to build a bottom-up growth plan to demonstrate the opportunities and needs. While it can be daunting, our retail partners have recognized the effort it has taken, which has been quite rewarding when finished.
After we focused on selling more of what we already have, we then turned our attention to new items and new merchandising vehicles. In working with a particular client, we were able to pull together over 30 new item suggestions and a multi-quarter approach to help build a proposal for off-shelf growth. Notice, I did not say promotions. As they say, necessity is the mother of invention, and this has also been true as we have focused on building a mountain on a mountain. There are many strategies outside planograms that don’t involve incremental floor space to help our retail partners hit their budgets. This, too, has been a welcomed approach by many as we have taken an all-encompassing approach.
Looking ahead to the future, we have already started building 2022 plans with our clients. In the next several weeks, we will begin to share more specifics on how we plan to help clients drive comparable growth. Here’s to hoping that everyone will be standing on top of their mountain on a mountain.