Changing your Channel Thinking
We live in a time of accelerating change.
One of the most significant in our industry is the changing retail channel landscape. Just think about what has happened and is happening.
Discounters’ (Aldi & Lidl) share has doubled. Tesco have their own discount format – Jack’s. Value retailers (Poundland, B&M etc) have grown significantly. eCommerce continues to grow. Amazon are selling more FMCG products. FMCG brands are selling Direct to Consumer. There has been a blurring of the lines between grocery and food service. Convenience stores and forecourts have upped their game. More and more restaurant brands sell products in grocery.
There are more places for shoppers to buy than ever before. There are more places for brands to sell than ever before. This creates some heat. Senior people will be asking tough questions “What are we doing in eCommerce?”, “What can we do in Discounters?”, “What’s our Impulse offer?” There is pressure to do something and do it right now.
But the real question is not “what can we do?”. Anyone can do something. The real question is “what are the right things to do?” The things that will help you win in the short term and will set you up for success in the longer term.
How do you do this? We think you still need to think about the core things (1) WHERE to sell (2) WHAT to sell (3) HOW to sell. But you need to think about them in a different way.
1. Thinking differently about WHERE to sell.
From: Channels playing competing roles. To: Channels playing complementary roles.
It is (relatively) easy to sell in more channels. You can probably get the listings. However, just because you sell in more places doesn’t mean that you sell more. Sales are often being moved around. What you sell in a value retailer is what you don’t sell in a supermarket.
It is also easy to set up channel teams to compete internally. You give the eCommerce team a stretching target. They hit the target. Other channel teams miss theirs. Sales are being moved around.
Instead, you need to take a step back and think about the role that a channel plays. For your business. Your category. Your brand. For instance, if you are a snacking product, the convenience channel may all be about driving trial. If you are a product with a regular purchase frequency (e.g. nappies, pet food, soft drinks) eCommerce may be about driving shopper loyalty. If you are a more specialist product (e.g. incontinence) then supermarkets may play a normalising role for the category.
It’s also worth bearing in mind that a channel can play a non sales driving role. When Magnum do their pop up stores it is about brand equity not sales (even if people are queuing to get in).
Give each channel a role. Then set up what you do in that channel to fulfil that role. A complementary role not a competing one.
2. Thinking differently about WHAT to sell.
From: Selling the products you have. To: Selling the products shoppers are most likely to buy.
The easiest thing to do is sell your current products in different channels. You already have the products. Factory lines are set up to produce them. But this is a supply led approach – selling what you have. It’s not a demand led approach – selling what shoppers want.
To be successful in different channels you have to adapt what you sell.
Yoghurt is a good example of a category that is adapting its portfolio for different channels and usage occasions. To win in the ‘on the go’ occasion in the convenience channel you can’t sell the standard 4 pack that rolls nicely off the production line. Yoghurt manufacturers are selling more singles – with a spoon attached to the product. They are selling more drinkables. They are selling more pouches. They are trying to make a
yoghurt as easy to eat as all the other ‘on the go’ options shoppers could choose to buy.
Most channel innovation isn’t about developing completely different products. It is more about developing different formats and pack sizes. It might be trial sizes for Drugstores. It might be larger packs or refills for eCommerce. It might be a different pack size and price point combination for the value channel.
What to sell is not about what you can sell. It is about what you should sell.
3. Thinking differently about HOW to sell.
From: Rolling out your standard selling guidelines. To: Channel specific selling guidelines.
The easiest thing to do is to sell standard products. In standard case sizes. On the standard fixture. Supported in a standard way. Just take the supermarket rules of engagement and apply them to other channels. But a lot of growth channels have different rules of engagement. Doing things in a standard way isn’t good enough.
For instance, if you are selling in Discounters you may need to sell in retail-ready mixed cases. You will need to think about different rotation of products. A great example of this is from Mars. They have a mixed case – M&M’s, Minstrels, Maltesers. There are twice the amount of Maltesers in the case as they have the highest rotation.
If you are selling online you will need a clear (hero) product image rather than a standard pack shot. You will need to pay attention to your product name. You will need to win in search. Lots of brands go online with a standard pack shot, a name that misses key information and a weak position in search. They don’t get seen and they don’t get bought.
You need to be clear on the rules of engagement. Then adapt how you sell to meet them.
The channel landscape will continue to evolve. We all need to evolve with it.
This means taking a step back. Changing your channel thinking from what you can do to what are the right things to do. Then doing those things. Things that deliver in the short term and set you up for success in the longer term.