As consumers tighten their belts, the fight for grocery shelf space intensifies!

  • Competition for supermarket shelf space is intensifying as brands, including store brands, vie for limited spots.
  • Grocers are reducing the number of items and overall space, leading to increased pressure on shelf availability.
  • Consumers are shifting towards lower-cost store brands to manage rising grocery bills.
  • Retailers are becoming more selective about which products to stock, focusing on brand performance and consumer demand.
  • Slotting fees for shelf space can be significant, ranging from $100 to six figures per item.
  • Major brands often influence shelf space decisions as ‘category captains’ and seek prime locations for visibility.
  • Inflation and the growth of private label brands are increasing competition for shelf space.
  • Companies are investing in new products and marketing to maintain or gain shelf presence.

The competition for shelf space in supermarkets is heating up as various brands, including more affordable store brands, compete for a dwindling number of spots in grocery aisles. According to Steve Zurek, a vice president at NielsenIQ, grocers are cutting back on both the number of items they carry and the overall physical space available. This shift is largely driven by consumers opting for lower-cost options to manage their grocery bills, which have surged in recent years. nnAs a result, supermarkets are becoming more selective about the products they stock, focusing on those that can help keep prices down for shoppers. Executives in the food industry are taking notice, investing in new products and ensuring that their packaging and pricing appeal to both consumers and retailers. nnShelf space is critical for brands, as highlighted by Conagra Brands CFO Dave Marberger, who noted that prime shelf locations can significantly impact sales. However, securing this space is not guaranteed, and brands must continuously perform to maintain their positions. nnData from NielsenIQ shows that between 2009 and 2023, the square footage in supercenters and supermarkets decreased by 5% and 3.3%, respectively. Additionally, retailers have cut unique products by nearly 9% from 2020 to last year. nnFactors influencing which brands make the cut include brand recognition, sales performance, and the payment of slotting fees, which can range from around $100 to six figures per item, depending on the product’s turnover rate. Some brands, due to their influence and marketing power, may bypass these fees, but for most, they are a necessary cost of entry. nnRetailers also rely on ‘category captains’—top-selling brands that provide guidance on product mix—to help determine which products to stock. The goal is to secure prime shelf locations, often referred to as the ‘strike zone,’ which are crucial for driving sales. nnOnce products are on the shelf, major resets typically occur once a year, with minor adjustments happening midyear. Companies must wait for these resets to secure or regain shelf space unless they introduce major new products. nnThe competition for shelf space is further complicated by inflation and the growing presence of store brands. As consumers become more price-sensitive, they are increasingly opting for private label products, which adds to the competition for limited shelf space. nnIn response, companies are investing in product innovation and marketing to stay competitive. For instance, Celsius Holdings is expanding its product offerings and marketing efforts to capture more shelf space in the energy drink market. nnOverall, the battle for grocery shelf space is fierce, with brands needing to adapt quickly to changing consumer preferences and market dynamics to secure their place in the aisles.·

Factuality Level: 8
Factuality Justification: The article provides a detailed analysis of the competition for supermarket shelf space, supported by quotes from industry experts and relevant data. While it is mostly factual, some sections could be seen as slightly biased towards the perspective of the companies involved, and there are moments of redundancy in discussing the impact of inflation and consumer behavior.·
Noise Level: 7
Noise Justification: The article provides a detailed analysis of the competition for grocery shelf space, supported by data and expert opinions. It discusses the impact of inflation, consumer behavior, and strategic decisions by companies, which adds depth. However, it could benefit from more actionable insights and a stronger focus on accountability regarding the consequences of these market dynamics.·
Public Companies: Conagra Brands (CAG), Celsius Holdings (CELH), J.M. Smucker (SJM), Clorox (CLX), Perrigo (PRGO)
Private Companies: Mama’s Creations
Key People: Steve Zurek (Vice President at NIQ), Dave Marberger (Chief Financial Officer at Conagra Brands), Jarrod Langhans (Finance Chief at Celsius Holdings), Tucker Marshall (CFO of J.M. Smucker), Linda Rendle (Chief Executive at Clorox), Corey Tarlowe (Equity Analyst at Jefferies), Eduardo Bezerra (Finance Chief at Perrigo), Anthony Gruber (CFO of Mama’s Creations)

Track all markets on TradingView

Financial Relevance: Yes
Financial Markets Impacted: The article discusses the competition for shelf space among food companies and the impact of inflation on consumer behavior, which affects sales and market dynamics.
Financial Rating Justification: The article focuses on the financial implications of shelf space competition, pricing strategies, and consumer behavior in the grocery sector, which are all relevant to financial markets and companies.·
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Extreme Rating Justification: The article discusses competition for supermarket shelf space and the impact of inflation on grocery prices, but it does not mention any extreme events that occurred in the last 48 hours.·
Move Size: No market move size mentioned.
Sector: All
Direction: Down
Magnitude: Large
Affected Instruments: Stocks

Reported publicly: www.wsj.com