By Gareth Ellis
We are peppered with headlines today highlighting slower consumer spending growth and the woes of multinational brands. Politics, tariffs, and economics are front and centre. Just how are brands to drive sales in the short term and growth in the long term, against such a troubled backdrop?
Strong execution is the cornerstone of retail success. It drives performance, from route-to-market to merchandising to omnichannel and aligns with the overarching goals of the brand. In this article we focus on General Trade, which presents significant growth opportunity for brands in Southeast Asia, despite the market challenges. There is also a feeling that many companies have yet to develop a comprehensive strategy for engaging fully in this sector.
Sometimes, The Old Ways Are Best
Data should be at the heart of decision-making, if long-term success is to be realized. It plays a role in optimizing distribution networks, inventory flow and improving efficiency of product delivery across urban and rural landscapes. Data helps adapt and tailor promotions, pricing and shelf placement in retail stores. It also contributes to an integrated omnichannel strategy, across physical retail and online platforms.
Such marketplace agility and fluency only come, however, from a deep understanding of the landscape. There is a term, ‘slow data’, that feels appropriate in this regard. Much of the information generated today is produced at speed, shallow and fleeting, often compiled from unrepresentative sources. Whilst offering rapid feedback there is a very real danger that it cuts corners and does not provide the knowledge that really matters.
Slow data, by comparison, takes longer to compile but has depth. It is quality over quantity and much more likely to facilitate better long-term decisions that are good for business.
In retail markets as diverse in structure as Asia, a comprehensive knowledge of the landscape is crucial. Only then can good decisions be made relating to distribution, identifying critical channel architecture and finding the right stores for your brand.
Sometimes, the old ways are best – a well-crafted census provides the bedrock, modern day tools the ability to collect, classify and extract key information.
Route-to-Consumer
The journey a product takes, from factory to consumer, can involve multiple distributors, warehouses, independent transporters and wholesalers. In our experience, the average CPG category has 5-15 different routes-to-market. Of those, usually two to four account for up to 70% of product flows. Getting your brand to market as efficiently and effectively as possible will help increase sales and profits.
The end game is to exploit various avenues to growth. We have worked with clients to get more outlets, but also to unlock new channels. So, not just optimizing availability of your brand, but maximizing reach into independent trade and online.
One client wanted to expand into a new region, where they had only a token presence. Our Market Landscape Analyzer was the starting point, helping to size the market and quantify opportunities. Measures were made of the limits of direct distribution of the category, indirect distribution and potential extension. This in turn led to a market-entry strategy and go-to-market plan. The payoff was a four-year business plan, a competitively advantaged product portfolio and a roadmap to market leadership.
Strategies Towards General Trade
In a survey of FMCG companies conducted across Africa and SE Asia, we found that company strategies were weakest where there was a reliance on external data and line-of-sight on market dynamics, such as shopper understanding and trader needs. Yet these are also crucial to growth. Engaging with more shoppers at the point of purchase with assortments that are properly targeted, and promotions that are competitive, or trial-inducing, help to acquire new consumers.
Usually we build channel portraits, paint pictures of their importance and performance, shopper profile, plus assortment, price, merchandising and promotions. This approach was helpful to another client experiencing a decline in distribution and availability. We were able to develop workshops focused on channel strategy, consumption analyses, growth opportunities and innovation. Our work helped revitalize the product and brand architecture targeting consumer demand spaces more effectively.
In-Store Execution
In-store execution covers multiple things and is a subset of route to market strategy. Fundamentally, availability is the primary goal. If your brand is not there, an alternative will be chosen. The higher the penetration of your brand across the retail landscape, the greater the chance of sales growth or share.
Behind this assertion lie several subtleties that can influence the magnitude of your brand’s performance. The first of these is the quality of your distribution. Are you getting to the right stores, the stores with higher rates of sale in your category of interest? Our Market Landscape Analyzer helps clients identify the key channels and sub-geographies for consumption. Calculating your share in stores handling your brand also acts as a barometer of potential, should you successfully expand your store footprint.
The potential for insightful analytics in-store is huge. Too many to mention in one short article. But here are a few that ought to be given considerable scrutiny if you have serious thoughts about brand growth:
- Which sku should be the first to be pushed into a given store type? Important given the lack of available space in most General Trade outlets; and if you can add a second, which should that be?
- What does the price dispersion of the category look like? I.e., what proportion of sales occur at different price points, and do we have the key ones covered?
- Have you got a fair share of position, display space and exposure? Faster selling sku’s will turn over more frequently but are therefore at greater risk out of stocks. Lost sales due to unavailability of products are an expensive occupation.
Armed with well-designed research and solid fact-based structures, much deeper learning can also be extracted. For example, what is your brand share under different levels of competitor presence – in stores where two, three, four, etc. competitors are present? Understanding your share performance where a full competitive set are against you provides pointers for sales improvement. If your ‘consumer preference share’ is lower than your overall market share, more needs to be done in-store to elevate the profile of your brand. If the ‘consumer preference share’ is greater, your focus of attention should be to expand distribution to as many stores as possible.
Finally, data modelling can tease apart the impact on sales of various types of promotional activity. Which promotions, or combination of price and promo, are most effective? Most profitable? Generate the highest uplifts? Ultimately, it should be viable to improve sales whilst maintaining current levels of marketing spend, or alternatively, reduce spend and still achieve current sales levels.
These are just a flavor of the data analytics possibilities. They should all contribute to your execution strategy and drive retail performance.
To capitalize on the opportunities within General Trade, brands must adopt a strategic approach that encompasses portfolio management, brand positioning, channel selection, route-to-market planning, and in-store execution. Developing a detailed plan that addresses these elements is crucial for achieving long-term success.
You may also like our articles on Route to Market, parts 1, 2 and 3. Click here to start with Part .
Frontline Research Group are the right research partner
Frontline Research Group (FRG), with nearly three decades of experience, stands out as a leader in General Trade market research. With a deep understanding of the sector and expertise in gathering actionable insights make them an invaluable partner for brands looking to navigate the complexities of traditional trade in Southeast Asia.
By leveraging our knowledge, companies can better position themselves to seize the growth opportunities that General Trade offers.
FRG provide more than just data, they also provide analysis, insights and direction that may be used on a tactical and strategic level.
For more information or demonstration contact:
Steve Johnson, Managing Director, steve@frontlineafrica.com
Jack de Wet, Divisional Manager, jack.dewet@frontlineafrica.com
Gareth Ellis, Regional Manager SE Asia, gareth.ellis@frontlineafrica.com
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