Page 62 - Retail World Tob - May 2020

SALES & MARKETING FTROM PAGE 58 published ‘Perspectives on retail and consumer goods’, a paper focused on disruption in the US retail industry. The authors said that when facing disruption, strategic moves that once were optional become imperative. They recommended various strategies to remain competitive, including pursuing partnerships as a way to reduce cost while increasing opportunity. One year later, having seen those same US trends developing in Australia, we’ve now also been thoroughly disrupted by a pandemic. Surely the time to implement some of those recommended strategies has arrived. From a purely logical view, if we consider how low drop density is the primary reason for high delivery costs, it’s easy to see how a manufacturer with a low number of products in a given store will likewise face higher costs for in-store marketing and merchandising of those products. Other than reducing the frequency of store visits, little can be done to reduce sales and marketing costs when the number of products ranged by store is low. The reality is the revenue generated by sales versus the time to service the store isn’t in the manufacturer’s favour. When a representative needs to spend only a short time in each location, the amount of ‘windscreen time’ is disproportionately high compared with productive time spent engaging with the retailer or analysing meaningful amounts of data and developing consumer insights. By working with a specialist organisation that already has people visiting your retailers, a manufacturer can not only reduce costs but also benefit in other ways, depending on the range of services required. These benefits may include: • Shared travel costs resulting in an immediate reduction of cost per call. • No paying a representative for windscreen time. • Immediate access to specialised capabilities, data, insights and strategies depending on level of service outsourced. • Consistent, professional presentation of the product in line with an agreed planogram. Access some serious tools In a 2019 survey of brand manufacturers by US software company Monetate, 93 per cent said they regarded personalised marketing as a priority. Personalisation of elements such as offers, marketing communications and product recommendations has been found to add up to two per cent on the top line. However, traditional grocery retailers he people working in our supermarkets during the coronavirus crisis deserve medals. The assistants who encourage the elderly, the cleaners who take on crowd control and the department managers at the door dispensing disinfectant somehow have kept their stores open and, when possible, their shelves stocked despite the unexpected but vital additional roles they’ve had to take on. While those dedicated workers have absorbed the abuse and managed the masses, the less visible but equally vital external sales and merchandising teams have been working behind the scenes to ensure the right products are in the right place at the right time, presented the right way. Many have even set records along the way. Outsourcing sales and merchandising is nothing new, and today it’s expected by most major retailers. With the ROI of outsourcing becoming easier to establish through data analysis and the setting of clear KPIs, increasing numbers of brand owners are outsourcing the sales and marketing function, with smaller retail groups and even some independents now benefiting from the approach. Outsource or struggle As we’ve journeyed through the COVID-19 pandemic, with job losses at a truly shocking level, many companies have had to consider outsourcing as an alternative for a range of what have traditionally been in-house activities. This has been especially true for sales and merchandising functions because outsourcing enables a brand owner to maintain a strong presence and remain competitive. Understanding of how outsourcing can be achieved effectively has increased, leading to easier and more accurate assessment of the benefits to the brand. Many companies now find outsourcing is a cost-effective way to manage sales and marketing, and the range and sophistication of the data now available means their return on investment can be accurately assessed. This is good news for brand manufacturers that might otherwise be required to employ staff in full-time roles to carry out this vital function. In early 2019, McKinsey & Company 60 RETAIL WORLD MAY, 2020 “In Australia, sophisticated retailers are already developing highly localised product assortments based on the local demographic and shopper habits.”