Today's shoppers have become much more adept at finding value. They are "channel surfing" with increased frequency to research products and find deals, and shopping more channel types in search of value and trip mission fit. Bottom line, consumers are shopping less in grocery and mass merchandise stores and paying more visits to retailers in so-called "emerging" channels such as drug, dollar, convenience and club (not to mention e-commerce).
While the grocery channel continues to own the majority of food and beverage sales dollars, its share is on the decline. The growth of emerging channels as a shopping destination is a significant retail trend; in fact, according to industry sources, over the next five years dollar sales growth in emerging channels will equal that of the food and mass channels combined. The retail landscape has changed.
There are two primary barriers to creating a successful strategy to capitalize on the evolving consumer mindset and the growth of emerging channels: marketing and operations.
From a marketing standpoint, the opportunity exists for manufacturers to create channel-specific products/packs/pricing to meet consumer needs and achieve acceptable margins. Operationally, emerging channels may translate into smaller orders for manufacturers compared to grocery and mass, but a more narrow and focused assortment may enable demand smoothing and inbound efficiencies.
A plan for action really begins with acknowledging a key truth: the knowledge, and the power, has shifted to the shopper. Therefore, it is critically important to place the shopper at the center of the planning process, and for retailers and manufacturers to truly collaborate on joint business planning that creates mutual wins.
Shoppers continue to shift spending towards drug, dollar and club channels at the expense of grocery and mass merchandise.
|TIP: CPG companies must aggressively pursue a multi-channel strategy|
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