For retailers, capturing scale efficiencies requires a shift to a national brand and proposition. Independent retail banners or buying groups that recognise the market opportunity are transitioning to a strategy of ‘managing nationally and executing locally’ in order to not only attract supplier investment, but to deliver on a clear shopper proposition that is tailored to local needs.
SPP’s Consumer experts David Mackay, Graeme Chipp and Noel Leung discuss our systematic approach to unlocking go-to-market effectiveness, which is the key to aligning suppliers and retailers to deliver mutually beneficial outcomes.
How to unlock go-to-market performance
Winning in a market where consumer preferences and shopping behaviours continually shift requires consistent delivery against a distinctive and appealing proposition.
For independent retailers, sometimes with only a brand banner in common, this is often easier said than done. So what can independent retailers do to build and deliver a consistent brand proposition without losing the appeal of being the ‘local’?
Consumer preference and shopping behaviours are shifting demand to the local independent retailer
Changing consumption patterns reflecting on-the-go purchases with a focus on quality, sustainability and provenance is driving more frequent visits to the local retailer. This is evidenced in the shift away from multi-national and big box retail, which have experienced a downturn in retail sales trends1.
At the same time, Australia’s independent retailers reach a significant part of the market and are globally one of the best performing independent retail markets, with an average of $42,081 monthly retail sales per outlet – second only to North America2.
Exhibit: Average Monthly Sales per Independent Retail Outlet by Country2
Capturing scale efficiencies requires a shift to a national brand and proposition
Local retailers are well placed to capture a greater share through improved focus on their local market, but they must balance this with the need to procure and promote efficiently to establish scale economies in order to compete effectively in the market. For example, for many retailers, without the structure and scale of the grocery giants, the cost of doing business in independent retail can be a significant disadvantage despite the higher margins available.
This disadvantage extends to negotiations for supplier investment. Suppliers often seek to optimise their distribution and profitability through the independent retail channel, where they frequently realise higher margins. However, the cost of doing business with independent retailers without a clear value proposition and consistent execution is a very real constraint.
The new game: Act local / Access scale economies
Independent retail banners or buying groups recognising the market opportunity are transitioning to a strategy of ‘managing nationally and executing locally’ in order to not only attract supplier investment but also to deliver on a clear shopper proposition that is tailored to local needs.
Independent retailers who have successfully deployed this strategy have focused on organising around core go-to-market capabilities, using this as a source of competitive advantage to secure greater supplier investment and capture a greater share of consumption, without losing the ‘local’ flavour that consumers increasingly demand.
Our experience with successful models highlights the power of alignment around shopper proposition
With local operators rightly demanding a say in where they invest, clearly it is not always easy, and there are no quick fixes. Success stories do, however, have one thing in common: alignment of all parties – independent members, national support office and suppliers – to a common goal of delivering a distinctive shopper and member value proposition that drives traffic and spend in store.
A systematic approach can be taken.
Debunking traditional myths, it is possible to take a systematic approach to build productive member, retailer and supplier relationships, which can go a long way to delivering results. Our key take-aways include:
Consistency in proposition and execution can be achieved without losing ‘local’ flavour
- Shopper propositions may not always be distinctive, but if executed well, it can be a competitive advantage
- Range and Format need to be aligned to the value proposition, whilst being adaptable to local needs
- A granular approach to format grids can deliver in spades – driving category consistency and localised ranging
- A core range can simplify the business – ranging across many categories have significant overlaps
A national structure does not diminish the role of the states
- The states have a role to play in execution
- Foot soldiers ‘adding value’ not ‘expediting’ need help
- Continuous improvement culture delivers upside that is sustainable
Ultimately suppliers want the same thing as retailers – but they are more discerning on where to place channel investment
- Assurance of execution across national footprint is worth plenty
- Suppliers are often not tapped for category expertise
You don’t need a lot of data to make evidence driven decisions
- Data is king but basics are often missed
- Data can be powerful in shifting retailer and supplier relationships from adversarial to constructive
David Mackay is a Partner at SPP and he leads SPP's Sports, Media & Entertainment and FMCG/Retail practices. David assists organisations to develop and execute business and technology strategy, and improve business performance through people, process and technology. David...
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Noel Leung is a Partner at SPP and is an experienced strategy consultant with more than 14 years of experience working with senior leaders of organisations in Higher Education, FMCG, Agribusiness and NFP sectors. She takes an evidence based approach...
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