As trading partners work together to keep their businesses up and running during the coronavirus crisis, retail stores are cutting back on some SKUs and jointly agreeing with suppliers to roll back planned promotions, officials of General Mills said in a conference call this week.
Those trends—which are helping to keep stores in stock and meet the massive shift as away-from-home food offerings dwindle amid a nationwide move to limit social gatherings to slow the spread of the virus—bode well for leading CPG brands and could potentially “reintroduce” them to consumers who had left them for a wave of their “challengers.”
Jonathon Nudi, General Mills’ group president of North America, told analysts on an earnings call that as the crisis arrived, “communication with retailers is the best I’ve ever seen in terms of partnership.” The bulk of discussions are in varying stages regarding simplifying promotions, assortments and shipments.
“We’re talking about how we can simplify the supply chain,” Nudi said, according to a Sentieo transcript. “In some cases, that might mean running fewer SKUs, running the big SKUs of soup and not running some of the tail brands. ... Talking about shipping full pallet quantities as opposed to mix layers on pallets to customers, and then making trade-offs around direct-store deliveries for our retailers, [which is] actually a very good thing.”
He added that General Mills has “jointly” pulled back merchandising planned for April with some retail partners but mentioned “that conversation was just beginning” with others.
CEO Jeffrey Harmening emphasized a need to execute in the current conditions, requiring that workers remain safe and deliveries aren’t interrupted. “We need to do both. We can't really do one or the other,” he said, adding that General Mills is staggering lunch and other breaks at plants to encourage appropriate social distancing.
“Our brands are actually well-positioned, [as Nos.] 1 or 2 in our categories. And as people look for things, they know in times like these, our brands tend to do fairly well because [they] offer comfort, because it’s brands that they know and they trust. And to the extent that retailers are cutting down on the number of SKUs they have in the short-term in order to make sure they sell through as much product as possible, [it] is really helpful to have the top-turning brands in the categories, which we do,” he said.