The Top 5 Risks to Retailer Branded Innovation Schemes

By Theadora Alexander, CEO

Engaging with retailer partners at YF is one of the most rewarding parts of our work, as we want to ensure branded innovation is delivered in a win-win-win way, for suppliers, retailers and of course consumers.

So having advised on and witnessed several cycles of supermarkets trying to ‘win in branded innovation’, I thought I’d share the pre-mortem on what we see going wrong most often, and therefore not delivering to its potential.

Like with any pre-mortem, this could read very doom and gloom. That is not the intention. The intention is to share open insights and opinions on what makes these schemes work – or not. Because if we can be open about these things, it will lead to more progress – and that’s the goal of YF.

I see 5 risks…

  • Risk 1: Lack of buy-in – is the organisation 100% on board with this at every level?
  • Risk 2: Movement versus original goals – are we clear on the goals and measures?
  • Risk 3: Incongruent KPIs – are the KPIs adjusted to reflect this?
  • Risk 4: Lack of adaptation in operating models – is the operating model set up to achieve this?
  • Risk 5: Cash underinvestment – have we put enough resource into making this actually happen?


Risk 1: Lack of buy-in


This comes from 2 things; senior sponsorship and organisational buy-in.

Let’s start with senior sponsorship:

  • Is the leadership of the organisation bought into this scheme?
  • Would they say no to immediate cash reward from big FMCG in order to deliver on it?
  • Would they invest company resources in order to achieve it?


A prime example is Tesco’s gondola end space for the accelerator scheme, showing their commitment to giving newer brands visibility over established ones. This demonstrates a willingness to sacrifice short-term gains for long-term progress.

The second tenet to buy-in is across the buying teams and org:

  • Do the buyers still feel a sense of ownership and accountability over their category?
  • Do they believe this delivers value for them, really?
  • Do they feel connected to the brands being listed?


Where listing decisions are being made independently of category buyers, it can get messy very quickly – and needs extra attention to ensure alignment and success.

Beyond this, it has to reverberate through the rest of the organisastion.

  • Can the supply chain handle many new suppliers?
  • Can the EDI team set them up efficiently?
  • Are there enough store hours to execute on the ground?
  • How is this being managed from a GSCOP perspective?


All these things are the difference between a vision and a highly functioning reality.


Risk 2: Movement versus original goals


In my recent Grocer article regarding the Prime Hydration boom & bust, I reflect on the enormity of the term ‘Innovation’. What does it actually mean?

Ultimately, buying teams take new suppliers on for a reason – there is a goal for the newness. Having these really clearly laid out up front makes it so much easier to i) identify the right propositions and ii) assess performance success in a busy diary.

Which of the 4Fs is the scheme and specific range serving?

  1. Fame – is it there to generate talkability or a newsworthy headline? To jump on a trend and earn some quick cash along the way? See Aldi’s Next Big Thing
  2. Fortune – does it deliver new long term value to the category, either by driving shoppers to trade up or bringing new shoppers in? See Tesco Accelerator Scheme
  3. Future – does it deliver on long term strategic objectives such as environmental or health goals? See Iceland Brands on Ice
  4. Fun – is it a passion project for the buyer to drive some energy into the category or pursue a strong belief they have in the growth areas? See the retailer Dragon’s Den ideas


Top marks if the innovation delivers on all four of these, though it’s not often the case, and each one is immensely important and valuable.

Clearly the measures of success, and the period over which we invest in a new product, will depend on which of these Fs we are optimising for. If it’s about fame, it would naturally be seen as a campaign, not a long-term listing. It would be expected to spike and then tail away, like any viral campaign or fad. Perfect for a ‘when it’s gone it’s gone’, perhaps. On the other end of the spectrum, if we are optimising for future, we would expect a slow build of demand. You can imagine the demand plans, reflecting rate of sale charts over time, would look entirely different for these scenarios.

I suspect the retailers to profit most from Prime will have been those that saw it as a fame or fun play. Those that are left with stock most likely listed it as a fortune play and planned demand and purchasing accordingly.

To avoid the failure of the innovation scheme, setting these goals is absolutely essential.


Risk 3: Incongruent KPIs


Retailer X: “We obviously aren’t going to assess the brand on purely rate of sale – we know they won’t be able to compete with [insert big FMCG name] on that. This is about bringing new shoppers into the category that we aren’t currently serving”.

6 months later…

Retailer X: “Unfortunately they haven’t hit our unit hurdle rate so we are offboarding”.

I am a Darwinian – I believe in survival of the fittest. But just like in any ecosystem, different organisms play different roles in keeping equilibrium.

Innovation is usually invested in to bring new shoppers in, trade shoppers up, deliver on a fame initiative or deliver on a strategic goal (see below for ‘goals’). But, in the majority of cases it’s a long game. If everything was assessed on unit ROS in the first 6 months, opportunities would be missed.

But when push comes to shove, it is so easy to revert to unit ROS as the sole measure of performance – especially when commercial pressures come knocking.

Where these initiatives find challenge is where the KPIs are not widely known, monitored, or connected to job descriptions.

  • Are the buyers incentivised to make this work?
  • Are they given KPIs that reflect that?
  • How much innovation is the right amount? How much is too much?
  • How will you measure success?
  • What are the margin expectations? Would you say no to a brand if they were a few margin points off? What is the threshold?
  • How important is exclusivity? Would you say no to a brand if they were bang on category strategy but not able to deliver exclusivity?


I could go on and on. Ultimately the point is to align incentives because, rightly or wrongly, people focus their efforts around their direct targets and KPIs – anything not on there falls to the bottom of the list.


Risk 4: Lack of adaptation in operating models


Big retail is not designed to work with lots of smaller suppliers and, frankly, it doesn’t need to be. Look at the USA – there is a reason that brokers and distributors are staples in the supermarket operating models. Trying to shoehorn lots of new suppliers into an existing operating model built for ‘fewer, bigger, better’ is a recipe for disaster.

  • Your MOQs are too high for us
  • You haven’t filled in the new line forms correctly
  • We need you to invest in EDI
  • Have you ever worked with a big retailer before?
  • Your supply isn’t good enough

A big point of failure in these schemes is the way in which RTM is structured. Grocery in the UK could benefit from taking a leaf out of the OOH book for this.


Risk 5: Cash underinvestment


Make no bones about it – there are a lot of potential suppliers. Thousands and thousands. At YF we have a large team responsible solely for understanding the dynamics of brands in the market.

Where these schemes go wrong is where there is not enough investment from the retailer in either internal or external resource to manage the suppliers both before and after listings.

  • Emails don’t get answered
  • Feedback doesn’t get given
  • Listings get delayed
  • People get frustrated


It is always the thing we see underestimated and those that are involved in the scheme are simply being inundated on Linkedin and email. It is not through any fault of their own. It’s just a capacity constraint.

A thoughtful investment in the right resource protects you from both a supplier branding perspective and a GSCOP perspective. It’s a prerequisite to running the schemes.



Like with any pre-mortem, this could read very doom and gloom. That is not the intention. The intention is to share open insights and opinions on what makes these schemes work – or not. Because if we can be open about these things, it will lead to more progress – and that’s the goal of YF.

If you are looking at these schemes either as a brand or as a retailer – and would like to discuss how YF can advise you, please reach out. It’ll come as no surprise to you that we have plenty of insight to share.

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