Category & Insights

Labour Shortages impact the Bottom Line

Posted on 30th August, 20223 min read

For decades Strikeforce and other field merchandising organisations have provided suppliers and brands field merchandising services and support across retail channels utilising a deep pool of talented brand activators.

Brand activators execute on a daily basis, in-store activations that include compliance, maintenance, display build, audits, distribution drives, pre-sell, store set ups and other ad-hoc activities upon request.

These services are critical to ensuring that brands are available and accessible, presented according to retailer requirements in a compelling manner to attract trial and entice shoppers to pop an item into their basket or trolley.

Pre 2020 there was a rhythm and consistency to the type and frequency of activation that suppliers, retailers and categories adhered to facilitating a relatively smooth process. Familiarity allowed some suppliers to reasonably forecast an expected return on investment for a particular activation based on the mechanics and resources required to effectively implement the activation in-store. This in turn allowed them to do a cost/benefit analysis on each activation and, if they ran their own in-house representation, quantify the result.

As a result, some suppliers with “big” brands were funding their own activation teams with outcomes varying based on relationships with individual store managers, experience and skills of their team.

The arrival of COVID in Australia in January 2020 tossed this level of certainty out the window. 

We were suddenly thrust into an unknown environment where historical outcomes meant little, in-house resource was draining revenue through salaries and on-costs while strict and mandated rules to avoid the spread of infection sidelined these teams and reduced their effectiveness to zero.

This was occurring while organisations like Strikeforce were able to maintain an in-store presence, due to being deemed an essential service and ensuring brands were available on shelves wherever possible.

The learning from the past two years for brands trading in a “stop-start” retail environment is that it makes perfect sense to outsource field activation services.

Why? The ability to turn resources on and off as required significantly improves an organisation’s bottom line. In addition, any investment in outsourcing field activation services not only reduces the possibility of in-house representation once again being sidelined at a fixed cost but enables a flexible service built around executional excellence borne by years of experience.

So, has the FMCG industry been able to seamlessly shift back into the same flexible and agile merchandising structures in 2022?

The FMCG industry is no different to any other sector and is experiencing some pain from the well-documented labour shortage experienced across Australia.

This labour shortage is highlighted by a surge in job vacancies across the nation. According to a recent Guardian article, job openings from September to November 2021, jumped almost a fifth or 18.5% from the previous three months.

To provide some context that tally was almost three quarters higher than February 2020.

While these figures pre-date the worse of the Omicron strain they highlight how tight the labour market is, with companies struggling to fill in for staff that have COVID or have been forced to isolate due to being a close contact.

While we are now experiencing relative “normality” there are no guarantees that this will continue to be the case in the medium to long term with some leading health bodies predicting that we may see the emergence of new COVID variants that may once again disrupt the rhythm and flow of daily life including limiting access to FMCG channels for in-house merchandising teams.

In the interim, the labour shortage is not going away anytime soon. With the proliferation of alternatives that have surfaced over the past two years, brands need to constantly remind loyalists of the features and attributes that the brand offers and what attracted them in the first place.

To do this there needs to be a well-thought-out and executed strategy with the capacity to not only maintain a day-to-day brand presence but to flex up and down with activation “blitzes” as required.

Outsourcing field representation to organisations like Strikeforce allows suppliers to optimise marketplace brand presence and the need to control costs at the same time allowing flexibility and agility to scale up and scale down as required.