We are in a world of ‘known unknowns’

We are in a world of ‘known unknowns’ 1

We are in a world of ‘known unknowns’. Now is the time to come off autopilot.

I don’t know about you, but I am finding it very hard to take my eyes off BBC News. Before diving into this month’s reflections, our thoughts and energy is with anyone impacted by the crisis in Ukraine. We are desperately supportive of peace and ask our Community members to keep each other posted on how brands and team members can play their part.

For any brands where founders or key members of the team are impacted directly, we will do what we can to help you keep business continuity so you have one less thing to think about. Please reach out.

It is fair to say this is the latest variable in what we see to be another 12 months of acute change in the FMCG industry. There are so many unknowns – and we know they will definitely affect us – we are just not 100% sure how.

Change brings with it huge opportunity for nimble brands but requires us to come off autopilot and dial up our commerciality. Now is the time to look forward, think strategically, and make those scary decisions.

I have put together nine ‘known unknowns’ that have been on my mind – are these on yours?

To be clear, this is not about doomsaying or fearmongering – being pragmatic about risks and digging for opportunities is a critical enabler to success.

  • On the demand side, we know that there will be a post-Covid world, but we do not know what that world looks like for the FMCG space. The recent Omicron surge has, once again, held travel, offices and hospitality back, and continues to fare well for the supermarkets’ share of spend. We know change will come in H2 and we expect to see delists and market corrections as a result.

  • We know there is a huge amount of consolidation and corporate change in our sector, with more to come. Almost every major retailer is expected to change hands, which results in a change in personnel, slowdown of strategic moves and an aggressive focus on EBIT pre-and-post transaction.

  • We know that inflation and rising interest rates will impact consumer confidence and appetite for our products, but we do not know quite how. This could be a huge opportunity (The Lipstick Effect) but value will be challenged above all else.

  • On the supply side, we know that macro forces are driving up almost every cost – both above GP and below GP. We know that oil prices were already challenging, and that with the terrible crisis in Ukraine, this will only surge further with cost inflation lasting longer. How long and how much, we do not know.

  • We know that investors are being increasingly cautious but have significant capital to deploy, that they must deploy. We know the money exists and that for the right propositions they will move quickly. We know that profitability is rising up their agenda.

  • We know that the government has significantly helped all SMEs in the last three years, but this help will eventually need to be paid for. We know that there is a risk on Corporation Tax and Entrepreneurs Relief but do not quite know what the impact is.

  • We know that consumers do spend more for their preferred products and that innovation is a huge margin contributor in a world where margins are being squeezed. We do not know how retailers are going to prioritise this in their very long to-do list.

  • We know that HFSS legislation (whether it happens this year or not) is going to cause considerable macro space changes in-store, and that pretty much every category will be affected – but we also know the big players will be working with the retailers to protect sales as much as possible. We also know that this will impact what can and cannot be advertised, creating new opportunities.

  • We know that supply chains are going to remain disrupted and challenged for a while and are at risk of getting worse before they get better. We know that continuity of supply (and profitable supply) is a huge priority and reassuring your customers that you are safe is important.

Provoking thought…

Every unknown listed above (and many more besides) bring immense opportunity for you and the challenger brand movement. You are innovative, agile, resilient, and smart – that is why you are here. But you need to make sure you are taking opportunity from these, and do not let them become risks.

Below are some important questions you should be considering:

  • Firstly, most importantly, are you getting the time to think? You simply cannot respond strategically as unknowns start to reveal themselves if you are swimming in a pool of emails and noise. We all need at least half a day per week of meaningful thinking time. If you do not have that, what steps can you take today to move towards it for everyone in the business?

  • What time horizon are you operating in? How can you stretch it and zoom out?

  • Are you really as profitable as you can be? If you think you have done enough, do more. Cut deeper, be braver and challenge the value in your product. Focus on core competencies and find out what your customers really value about your product.

  • Is everyone in the team operating at maximum effectiveness? How can you all use this as a personal development opportunity?

  • Are you setup to be agile? Have you automated, eliminated or outsourced everything that is not a competitive advantage? Even if it costs a little more than holding onto it, there are significant hidden costs that come with lack of focus (particularly away from your value driver).

  • Are you getting the right management information on your business to make informed decisions effectively?

  • Are you planning on making big strategic changes? Is it sensible to do them right now in the context of all the change we are expecting? Only you can answer.

How we can help you

Join the YF Community

Doing everything on your own can slow things down and lead to higher costs. The YF Community allows you to become part of a collective voice and hear the creative approach and direction that other brands are taking to adapt to this year.

This month, on the back of many requests, we have created a new sub-community just for Stage 1 brands (<£250k turnover). If you fall into that bracket, or fit into our higher Growth Stagessign up here to be part of the right conversation.

Outsource your supply chain to us

More and more brands are outsourcing their supply chain management and change projects to our Supply Chain Team. We are expanding our service for existing clients to include customer service, if required, and can take off your supply chain weight in just four weeks.

Parachuting in NAM support

With shortages of NAM staff causing real challenges (not to mention more inflation), Alex from our Trading Team has released some time in his commercial team to help a limited number of brands manage their Waitrose and Sainsbury’s accounts.If you need interim account management support, get in touch with Alex and they can take it off your hands in less than two weeks.

Get recruitment off your plate

Recruitment has proven extremely challenging in the past year and we know that many of you are still struggling to secure new hires. Working with our Recruitment Team removes the time taken to search for the right candidates and ensures they are of the best quality.

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