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Channel shift – where ELSE should you be? Smart companies are riding the consumer wave with forward-thinking channel strategy

March 5, 2007

Media Release March 2007

Consumers are starting to shift out of traditional channels (such as grocery) and into alternative channels due to social and lifestyle changes in Australia, particularly the need for convenience. Concurrently, top tier and second tier suppliers’ profit margins are being increasingly queezed in grocery, resulting in the need to fill profit gaps from other channels.In response to these two meta-trends, blue-chip companies are putting their distribution strategies under the microscope.Norrelle Goldring, Principal of ShopAbility, says the big guns such as Coca-Cola and Nestle are well ahead of the game.‘We’ve been working with Coca-Cola for three years now, looking at how to optimise their non-grocery channels to increase sales,’ Norrelle said.

‘Coke worked out a long time ago the game is changing. This has driven their move in to healthier categories like juice, tea and natural energy drinks – but the question is how does this play out in different retail channels?

‘One thing many companies overlook is that shopper behaviour differs significantly depending on the ‘where’. Channels have segments, and shoppers behave differently in them.

‘For example, in the liquor channel demographics and behaviour are very different in stand-alone bottleshops versus drive thrus. Therefore, would you execute the same way in them? Not if you want to increase sales.

‘Companies also need to look at where the feet are pointing. With single-person households now around 20% of total Australian households, and households with people in their 20s still living at home a further 20% of total households, we are starting to see a shift out of grocery and into convenience and other channels. So the question is which ones to play in, where, and what it’s worth.’
Norrelle says there are many factors to consider in channel strategy, including:

  • Who is shopping for your product, what is their occasion and where are they likely to go to fulfill it? This requires mapping categories to shopper occasions to distribution channels.
  • What are the most important non-grocery channels for your category? Determining the size and potential value of each opportunity versus cost and ease of execution, competitive intensity and brand fit.
  • What is the role of your categories in each channel and channel segment, and how might you need to change your execution accordingly?
  • How much market share can you realistically get in each channel? Setting retail goals and establishing measures beyond sales alone – such as frequency of purchase and incidence in shopper baskets.

‘More and more, one of the biggest questions is where should we be? And it’s only going to get bigger as the market keeps changing,’ she said.

Channel Shift Media Release [Download pdf]

For media enquiries please call Norrelle Goldring 0411 735 190 / Lee McAllistair 0414
941 585 or email enquiries@shop-ability.com.au

Filed Under: Channel / Retail, FMCG