If you are in a role responsible for deciding your company’s channel and customer investment strategy, the chances are that the landscape that you look upon is a hugely different one to what it was, even eighteen months ago.
The choices you face and the decisions you take now are critical to your commercial future, as you look to predict where your portfolio’s shoppers will be making their decisions and how you can best profitably service their changing needs. Little wonder then that clients are looking for guidance on where and with whom to invest.
The pace of change in technology means that shoppers have seemingly unlimited options on what they can buy, when they can buy it and from where. The impacts are around us every day. The shape of retail is changing. Discounters aren’t new, but their rise, aided by macro-economic trends and a smart business model, has been dramatic. Ecommerce and home delivery is a part of everyone’s lives. In every UK high street the rate of closure of once dominant retail chains reaches record highs as they fall foul of increasing business rates and challenges to their traditional economic models. At the same time the number of food delivery bikes and mopeds has exploded and it won’t be long until we really do see the development of the fabled drone delivery service. What once sounded like science fiction is rapidly becoming science fact.
Changes in consumer lifestyles and the structural cost-to-serve models servicing these lifestyles, means we are faced with potentially huge changes to our current environment. The rise of challenger DTC brands, ranging from beauty to vitamins, from mattresses to shaving and from luggage to contact lenses has disrupted traditional thinking across the commercial departments of many clients.
In some markets, the changing structural cost of food service channels, with central kitchens bringing down the costs of out-of-home sourced meals to those approaching or equalling home cooked, means that food suppliers are having to rapidly reassess their channel strategy. As property developers are increasingly building properties without kitchens in some markets, the balance between future shares taken by supermarkets versus food service is bound to change. Nobody is predicting the extinction of large retail units, but the shift in balance is coming and to some respect, the shift to convenience is already here.
Against this background it’s essential that suppliers have a very clear strategy on where to invest. At Quantic, our approach to channel is one that aligns directly into a client’s overall category strategy and shopper understanding. By allocating the future value to a category provided by drivers to channels, clients can derive a more tailored view on likely channel development specific to their category than any retail analyst can ever provide. When aligned with mission-specific shopper understanding and cost-to-serve analysis, channel selection becomes a real part of a successful business’ competitive advantage.
