Retail is facing one of the biggest legislative changes in recent years. From October 2022, new restrictions on the promotion of High Fat Sugar Salt (HFSS) products will be enforced in England. Spend on HFSS products in the U.K. generates ￡17 billion per year. This legislation will significantly change consumer purchasing habits and, if retailers don’t prepare, cause significant loss of revenue.
Why is the change happening?
Around two-thirds of adults in England are overweight. The HFSS legislation is part of U.K. wide initiatives to reduce obesity. Evidence shows that volume promotions (e.g. buy 1 get 1 free) increase intended spending by almost 20% on HFSS products. Additionally, placing products in key store locations increases consumption. As an example, end of aisle displays of soft drinks increased sales by over 50%.
Although Covid has acted as a wake-up call for the government’s response to the obesity crisis, the legislation was delayed by 6 months (it was originally planned to be enforced in April 2022). Given that ordering for Easter had already been completed, the April date was not enough time for retailers and suppliers to respond accordingly. The legislation deadline is now October 2022.
What is the legislation?
The legislation will put restrictions on HFSS volume promotions and placement of products in key store locations:
Volume Promotion Restrictions:
- Stores will not be able to run volume promotions for any HFSS products
- Stores will not be able to sell HFSS products in key store areas, store entrances, end of aisles, designated queuing areas and checkouts
- Stores under 2,000 sqft – will be exempt from location restrictions
- Meal deals – stores will be able to run meal deal promotions
- Non pre-packaged products (e.g. fresh pastries) – will be exempt from volume promotion and location restrictions
What can you do about it?
- Understand the legislation –Retailers should seek to understand the legislation. The spirit of the legislation is not to completely ban HFSS products but rather to reduce over consumption. As an example, retailers can look to broaden their meal deal offerings (offering more choice and pricing options).
- Assess the impact – Conduct an impact assessment to understand the scenarios of no longer being able to place your products in key locations and run volume promotions. It’s key to build a model based on a full year of data as promotions vary significantly with seasonality.
- Collaborate with existing suppliers – Retailers aren’t the only ones affected by this. Retailers and suppliers should collaborate to work out new pricing, product, and brand strategies.
- Create the opportunity – The legislation opens opportunities for retailers and suppliers to promote new types of products to consumers in impulse locations. Retailers should seize the chance to promote healthy alternatives.
- Consider downsizing – The benefits from reducing the shopfloor to be under 2,000 sqft (legislation threshold for location restrictions) may outweigh the benefits of keeping the store at its current size. Retailers should build this out as part of their impact assessment.
- Train your staff – Shop floor staff will need to be ready to deal with any inspections on the legislation following October 2022. Latest documents should be accessible and a clear process in place.
- Plan in advance – There is no crystal ball for how consumers will react to this legislation. Retailers and suppliers be ready to adapt based on how consumers respond. Although the legislation was pushed back, there isn’t much time left to define and implement an effective HFSS strategy. Retailers should act now.
Overall, Retailers should act now to turn the threat of the legislation into an opportunity.
At Exevion, we are already working with a number of retailers to define and implement their HFSS strategy.
Want to know more? Get in touch with our team.
