Destination Unknown: Store Space & HFSS

Three weeks ago, the UK government performed another U-turn in delaying the introduction of volume promotions and digital advertising restrictions on foods high in fat, sugar, and salts (HFSS). Whilst the ‘canning of the banning’ made front-page news, and Jamie Oliver ventured to Downing Street with Eton Mess in hand, the one HFSS restriction which survived – the banning of HFSS products from secondary fixture space – is the one that truly matters.

Volume promotions have had a dwindling presence in UK retailers in the last decade, taking a clear backseat to price promotions, and the digital advertising restriction had no shortage of possible workarounds. Instead, the banning of HFSS products from aisle ends, checkouts and store entrances (and their online equivalents) was always going to have the biggest impact. This ban will still be implemented in just four months time, in October 2022.

Beyond the direct loss of these expandable products in high footfall floorspace, there will be profound collateral damage from changing macro in-store space and ranging.

Exact retailer response is difficult to predict. ‘Power promo aisles’, in-store promotional bays, and greater use of back of store are all strategies being currently trialled. What is certain, however, is that in-store macro space will need to change to accommodate any of these mitigation actions. All brands and all categories will be embroiled in the ‘space race’ in some way.

Larger manufacturers are more likely to withstand rationalisation activity by leaning on their brand scale, investment and deep retailer relationships. This will fiercen the battleground for smaller and medium-sized brands, who will increasingly need to prove the benefit of individual SKUs.

This is just the latest twist in a journey that has been fraught with uncertainty and lack of clarity from the government since the policy’s inception. Whilst some retailer & manufacturer’s time and money has no doubt been wasted, it is important to look past the headlines. The main policy driver of intended behavioural impact on consumers is still with us and will impact widely with uncertain collateral damage.