Building Sales in a New Age of Independent and Convenience Retailing

The Clarion Advisory Board is a unique collection of independent experts and thought leaders in fields relevant to our clients' work.

Here, Nick Shanagher, Managing Director of Newtrade Publishing and member of the Clarion Advisory Board, gives his thoughts on how to influence independent convenience retailers, a disparate audience that is becoming increasingly important for FMCG manufacturers. Combined they are as significant in size as a major multiple, but a tailored approach is needed to reach them as individuals.

Independent convenience stores have a 13% share of the UK grocery market, says the Institute of Grocery Distribution. Sales will rise from £22.2 billion today to £29.4 billion in 2019 at a much faster rate than the grocery market as a whole. The growth story is driven by changes in how UK shoppers behave and also by the better store standards achieved by most independent retailers.

The challenge for FMCG marketers is how to effectively be a part of this growth story.

There is so much variability in the way that these shopkeepers operate. They are promiscuous buyers prone to chasing the best price available and from a wide range of suppliers. Even the many distributors, wholesalers, buying clubs and symbol groups between the manufacturer and the retailer have limited control over what is presented to the shopper.

Reaching the independent retailer

Many marketing disciplines developed in the multiples are exported to the independent channels. However the results are difficult to measure. Promotions through symbol groups and field sales activity are popular. However, FMCG marketers must consider that most independent shops operate with a large assortment of products but small volumes of each. The implications of this fact makes using retailer marketing services, such as trade press advertising and PR, attractive.

Analysis of chocolate bar sales helps to make the point. For example, take Twirl with a £15 million retail sales value according to Retail Newsagent’s What to Stock analysis of data from 2,200 stores as compiled by EDFM. Twirl 43g is available in 95% of these shops and is the top seller. Even so, this means the average shop sells 9.3 bars a week. While FMCG companies want to think in terms of selling pallet loads of confectionery, the average shop needs to buy just 10 outers from their wholesaler a year to meet demand.

What this means is that in order to optimise sales in the independent channel, manufacturers need to focus on eliminating out-of-stocks and in ensuring their brand is present at the point-of sale.

A tailored approach

Working with the independent channel requires an understanding of the factors that drive shopkeepers to make decisions. You need to give independents information in a way that is relevant to how they operate. While pushing promotions through the independent channel is important, the key marketing strategies should be focussed on building distribution, ensuring the retailer keeps your brand on sale (puts your product on his shopping list) and displays your brand effectively in store.

Advertising, effective PR and promoting best practice through peer reviewed case studies are great ways of building brand awareness. Our research shows that retailers trust messages more when validated by Newtrade and are more likely to respond to them.

Empowering independent retailers by giving them quality advice and information is essential to take advantage of the massive opportunity in the independent channel.

by Nick Shanagher, Managing Director of Newtrade Publishing and member of the Clarion Advisory Board

No comments:

Post a Comment

We would love to hear your thoughts so make sure you comment on our posts!