Comment Central

Marcus Vallance, CEO, SalesOut

While the likes of Tesco are hell-bent on converting consumers to their own labels, brands would do well to spread their risk, diversifying their energies into the independent sectors where accurate new sales insight is shining a light on missed opportunities.

 
With the large multiples currently weighting their promotional activities in favour of their own labels, brand suppliers are left with a painful dilemma. They can’t afford to jeopardise their position in these all-powerful national retail outlets by kicking back. Yet, at the same time, they know they are chasing ever-diminishing returns if they continue to depend so heavily on this vast, high-profile distribution channel for their products. It isn’t only through in-store promotions and TV and newspaper ads that the likes of Tesco and Asda are squeezing the big brands by blatantly comparing their prices against the big names. Even online, despite their pre-set ‘Favourite’ folders, consumers are being pushed by Tesco into ‘clicking here to see cheaper options’ for each item they have previously preferred.
 
So how can the brands protect their market share, and sustain profits? Continually driving down their own prices risks devaluing the brand, while steadily chipping away at margins. The only real option is to boost sales elsewhere. Yet until now, the vast, yet extremely diverse and complex independent retail sector, as well as the often neglected but substantial independent catering sector, have held mixed prospects for the big brands. While there is no question of the scale of the market opportunity – the independent retail sector comprises over 50,000 store locations while there are over 250,000 independent catering establishments (from cafes to hotels) – the challenge to date has been how to target and maximise these sectors cost-efficiently and profitably.

The crux of the problem has been a lack of sales intelligence. Where sales and trend analysis statistics abound in the multiple sector, comparable insights have been sorely absent in both the independent retail and catering sectors. This lack of visibility has left brand suppliers and wholesalers very much in the dark when assessing where product categories and specific brands are selling well and, crucially, where opportunities are being missed. These companies’ only option has been to deploy local field sales teams to trawl the market, randomly making appointments and trying to boost sales with blanket promotions. Adding to the cost of sale, this has hampered the brands’ ability to generate healthy profits from the sector.  
 
Until now, that is. At long last, light is being shined into the black hole of sales data which exists but has never before been collected or analysed in the independent sector. Recognising the difficulties of capturing EPOS data from thousands upon thousands of diverse outlets, wholesalers have now been incentivised to capture and share information about actual shipments to stores. In return for providing this data, the wholesalers are given access to broader trend data, allowing them to identify opportunities they have been missing. No wonder, then, that wholesalers have been signing up to the service increasingly over the last few years. The intelligence is also being extended to the brand suppliers, creating a scenario where both parties now have a broader, more holistic view of what is and isn’t selling across the independent market – allowing them to do something about it. For example, a brand provider may have assumed previously that an increase of 3% in sales of a particular label of beer over a given period was impressive - metrics which take on a whole new significance once it is discovered that total beer sales across the independent sector were up 7%.
 
 
With consumer shopping habits currently shifting to an unprecedented degree, driven by worries about the recession, it is dangerous to assume that trends being witnessed in the multiples sector apply also to the independent market.  The availability of real statistics and their interpretation into actionable insights offers brand suppliers and wholesalers a powerful tool. For the first time, this allows them to accurately analyse the independent sector by outlet type, location, and consumption of product category and brand. Armed with this detail, they can hone their marketing and sales activities to pinpoint, measure and exploit specific opportunities. This means that promotions can be tailored, and informed decisions taken about the relative merits of a face-to-face sales call over a targeted direct mail promotion. This is a massive leap forward from the days of unqualified streams of data, or even business intelligence and CRM information. What’s on offer here is more than insight, even. This comprehensive, accurate, context-based sales information provides actionable insight.
 
 
Consider a huge brand like Coca-Cola, which may have been selling over several million products into this market - but without any visibility of where they had ended up after entering the wholesaler’s depot. Suddenly, it is in a position to hone its sales activities and influence greater take-up of its products, at such a fine detail level as being able to determine which fish and chip shops or newsagents warrant a fridge to stock its products, or which profitable outlets are failing to stock the Diet range. Over the 4-5 years it has been exploiting such insight in the food and drink market, Nisa has seen sales to 3,000 targeted member stores grow by 30%, thanks to the ability to accurately and cost-efficiently identify and exploit opportunities for the first time. The transparent intelligence it has access to is so sophisticated that wholesalers and brands can see not only how sales have broken down and where distribution opportunities have been missed, but the potential financial impact to their business if those gaps were addressed. Such capabilities offer an unprecedented and very welcome lifeline to the brands as they strive to create new sales opportunities and reduce their dependence on the multiples for profitable growth as the recession threatens to deepen. For the wholesaler, this could be just the beginning in forging stronger, more fruitful relationships with their suppliers, and boosting profits.