New Normal #4 Changing Channel Choices


What is the most watched episode of any TV drama, comedy or soap in the UK over the last 25 years?

The programme started in the 80s.  It was based in London.  There was an iconic pub.  It featured 2 brothers.  EastEnders…?

Well, actually the most watched TV episode of the last 25 years was Only Fools & Horses.  Based in Peckham.  Iconic pub – The Nag’s Head.  Two brothers – Del & Rodney.

It was the episode when they finally became millionaires.  They found an antique watch in their lock up which made its way to auction at Sotheby’s.  After hearing the opening bid of £150,000, Del faints.  The bids go higher and higher until it hits £4m.  Rodney faints.

The bidding ends at £6.2m.  Del and Rodney go straight to Boycie’s car showroom.  Rodney buys a Rolls Royce for Del.  The look on Boycie’s face is priceless.

The episode was aired in December 1996.  It was the final part of a Christmas Trilogy (the Batman & Robin outfits were in the previous episode).  It was watched by 24 million people.

These were the days before satellite TV had taken off.  Before streaming services.  Before YouTube.  When families sat down together to watch.  At the same time that everyone else was watching.  The days where a TV programme could only make it big on BBC or ITV.

Get a prime time slot on one of these channels and you were made.

Why are we talking about this?  Well, just like the TV landscape, the FMCG and Grocery Retail landscape has changed significantly in recent years.  If you were a retailer and had a big supermarket and superstore estate you were in good shape.  If you were a manufacturer and had strong presence in supermarkets you were in good shape.  Win the supermarket battle and you won the war.

Now the war is being fought on many different fronts.  You have a thriving Discounter channel.  You have a fast growing eCommerce channel.  You have a modern convenience channel.  You have food service.  You have ultra convenience through things like Deliveroo.  You have recipe box services like Hello Fresh.  To win the battle you have to win on multiple fronts.

This means adapting where you sell.  It means adapting what you sell.  It means adapting how you sell. It means making the right channel choices.

So, how can you do this?

Choosing WHERE to sell.  It’s easy to do something.  A channel is growing.  You can probably get listings.  Go for it.  Sales may look good.  In the short term.  But often what looks like it is working in the short term is storing up trouble in the longer term.  For instance, you give the value retailer a certain price point.  Then other retailers start asking for that price point.  You sell to shoppers at a certain price point.  Then shoppers start thinking this is the price they should always be paying for this brand.  The gain in the new channel is offset by losses in other channels.

To avoid this you need to set up channels to complement not compete.  Take a step back and think about the role different channels should play.  Is the channel about trial and recruitment – like convenience for soft drinks and snacking?  Is the channel about brand equity – like Nespresso stores or Magnum pop-up stores?  Is the channel about driving loyalty like eCommerce is for nappies and razor blades?  Think about the wider landscape.  Give each channel a role.  A complementary not a competing role.

Choosing WHAT to sell.  This is obvious – you sell what you make, right?  Take your current portfolio and get it into more places?  It’s the easiest thing to do.  Everything is set up to sell what you currently sell.  But this is a supply led approach.  It is not a demand led approach.  A demand led approach means selling what shoppers want.  This often differs significantly by channel.

Yoghurt is a good example of a category that is adapting its portfolio for different channels and usage occasions.  It is a category that has had a portfolio (multipacks and big pots) for large supermarkets not for more convenient, on-the-go channels.  So, you see the category moving towards more singles (with spoons).  Towards drinkables.  Towards pouches.  Towards products that are as easy to eat as the competitive set in these channels.  What you sell is not about what you can sell.  It is about what you should sell.

Choosing HOW to sell.  In supermarkets, the rules of engagement were pretty standard – range, space, position on shelf, promotional slots and feature.  Big brands – the ones with more range, space, promotions – had an in-built advantage.

But the rules of engagement are different in the growth channels.  For instance, if you are selling in Discounters you will need to sell in retailer ready mixed cases.  You will need to think carefully about the mix of products based on rotation.  You will need to use outer packaging to drive brand stand out.  You will need to have a clear and compelling message to reinforce why your brand is worth paying more for (than the Discounter brand next to you on shelf). Different channels have very different requirements.  Shoppers in different channels have different needs.  Your selling guidelines need to reflect this.

The old normal = if we win in supermarkets, we win in the market.  The new normal = if we win outside supermarkets, we win in the market.

To win you need to make the right channel choices.

Cushti.

Feel free to forward. Have a great weekend. Speak to you in a fortnight.

We are an FMCG strategy consultancy. We help companies win with shoppers & retailers in 4 main ways – Category Strategy, Channel Strategy, Shopper Marketing Strategy and Retailer Engagement.

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