At an investor conference showcasing “some of the best and most promising growth companies” in their industries, Advantage CEO Dave Peacock on Tuesday made the case for why Advantage Solutions is well-positioned and poised to thrive in the retail and consumer-packaged goods space, regardless of market conditions.
In an interview with Joseph Vafi, an equity research analyst for Canaccord Genuity at Canaccord’s Growth Conference in Boston, Peacock detailed Advantage’s scale, unique insights and expertise, and how the company helps shape the way people shop – in stores and online.
“We are really at the nexus of CPG and retail, and we convert shoppers into buyers, quite simply,” Peacock said. “When you walk through a grocery store and see the items on shelf, see the displays, see folks sampling — we have a hand in all of that.”
Advantage’s essential work, he said, is often seen by industry insiders but ultimately felt by everyone.
With relationships with more than 4,000 CPG companies, most of the largest U.S. retailers, more than $3 billion in revenues and 70 million labor hours annually, Advantage is a juggernaut in the marketplace prepared to capitalize on market dynamics — and to succeed in its goal to “convert shoppers into buyers,” Peacock said.
Peacock also detailed Advantage’s ongoing business transformation from a holding company composed of separate businesses providing individual services to a unified organization offering a full suite of comprehensive and insights-driven retail industry solutions.
Below are some excerpts of Peacock’s conversation with Vafi, who said Canaccord views Advantage’s publicly traded stock “as a solid play as an industry leader in a solid sector.”
- Sharpening focus on core competencies. Advantage has been focused on simplifying its business model by re-segmenting its operations and divesting non-core assets.
“We’ve been in a process over the last year and a half where we’ve been working to simplify and transform the business, and ultimately accelerate the business,” said Peacock.
The goal, Peacock says, is for the company to align behind the core, differentiated solutions Advantage provides to retailers and CPG companies: business intelligence and sales growth; retail and brand execution; product, aisle and shelf reinvention; private brands; and omnichannel marketing.
To sharpen this focus, the company has sold more than 10 of its non-core businesses over the past 18 months, with those proceeds going to repay debt. For the most part, Peacock said, those divestitures are now complete. The company is striving to reduce its net-debt-to-EBITDA ratio to 3.5X or lower over the long-term. Advantage already has reduced that ratio to 4.1X in the second quarter, which is down from about 4.6X in 2022.
- Modernizing technology. The company is investing in technology to drive greater efficiency and productivity, which in turn benefits profitability. Advantage’s investments aim to bring more speed and efficiency to the services it provides clients and already are helping inform where it sends its teams to retail and how and where the company deploys sampling.
For instance, through a new collaboration, Advantage is rolling out A.I. technology that allows a teammate to walk down an aisle in a store, and within about 30 seconds, read every product on the shelf, checking placement, out-of-stocks, pricing and so on.
“That’s something that would normally take a person 25, 30 minutes to go item by item,” Peacock said. “The technology creates so much efficiency, which allows us to capitalize on sales opportunities like building displays. Tech enablement drives productivity within our business.” The objective, he said, is for Advantage to deliver more revenue growth and return on investment for its clients in the same amount of labor hours or less.
- Strategic partnerships fueling scale, productivity and value. Advantage is forming strategic alliances to enhance its offerings and reach new customer segments, such as focusing on emerging CPG brands through a new joint-venture with brand incubator L.A. Libations and collaborating with the tech company Genpact to provide business performance operations for clients. It also has recently formed a new strategic alliance with Swiftly, a leading retail media technology provider, to bolster its omnichannel capabilities.
“We’re partnering a lot more with people who are experts in their field,” said Peacock, who added that Advantage is focused on two types of partnerships: capability building (such as Genpact and Swiftly) and business- or revenue-driving (L.A. Libations).
- A business model built for any economic condition. “The nice thing about Advantage is we’ve been able to grow through both good markets and bad markets because there are so many different things that we can do to help our retailer and CPG partners manage and adjust to different shopping behavior,” Peacock said.
For example, the company is expanding its retail media capabilities, which help drive more shoppers into stores and boost sales by providing the rebates and promotions they crave. Advantage is also a leader in helping retailers develop and deploy private brands, which helps provide variety and value, and ultimately drives shopper loyalty. And Advantage is helping to scale innovation, ensuring insurgent brands can grow faster while providing retailers with new products that drive shoppers into stores.
“Regardless of the kind of economic backdrop, we’re able to generate demand for our services or … capitalize on (that) demand in all of our segments,” Peacock said.
Underscoring the value and resilience the company brings to its clients, Advantage boasts a 95% retention rate among its top 100 clients, many of whom have been with Advantage for 15 years or more.
“We’re excited about the business, and we’re excited about the ability to both manage our costs more proactively and the outlook for the consumer longer term, despite the difficult time right now,” Peacock said. “And we know we can help our clients manage through this difficult time.”
