Home' Convenience and Impulse Retailing : February 2010 Contents www.c-store.com.au | C&I | February 2010
Global Retail Insights
The Independent convenience retailer as a
for the Brand
By Brian Moore, International Retail Consultant
There is a strong case for suppliers to think about moving
the independent convenience retailer from a sales to a
marketing function at point-of-sale.
Australia has seen higher levels of dependency
on the major chains. Given Australia's already
high level of trade concentration, this heralds
more problems for suppliers, brands and
independent convenience retailers.
Apart from their tendency to cherry-pick
within categories, the major chains rarely
offer a full selection of the suppliers' range
and provide customers with minimal service
in the store aisle.
For suppliers, the marketing landscape
represents a zero-sum game. This means
that the additional trade support required by
the major grocery and convenience chains
means even fewer supplier resources being
available for maintenance and development
of the independent convenience trade.To
add to the problem, the revenue stream
from a good independent convenience
retailer often cannot cover the costs of
regular sales calls.
All this means that the independent
trade will continue to grow weaker -- and
the manufacturers more dependent on the
majors - unless Australian suppliers take a
radically different approach to investment
in the independent convenience channel.
Historically, suppliers have regarded the
independent convenience trade as a sales
function. They need to at least break even
on the cost of visit compared with size of
the order so that the cost of calling can be
justified. This approach has limited the
number of direct-call accounts that are
economically viable, resulting in increases
in trade concentration - and power.
Educational role of specialist
In many categories such as toys, books,
houseware and home entertainment, the
independent specialist retailer can fulfill
an important 'educational' role on behalf
of the supplier. Here the retailer helps to
bring the consumers closer to the brand,
allowing them to interact and bond with
the product. They also benefit from advice
and shop staff expertise.
In the case of convenience retailing, this
degree of shopper involvement may not be
However, properly supported by the
supplier, the Australian convenience
retailer can be a source of a brand's' full
range, and an advertising platform for the
brand, in a way not possible via the major
Properly supported in this way, with
appropriate training and point of sale
material, the independent retail outlet can
also function as a 'living billboard' for the
brand, communicating with the consumer.
Unfortunately, given the economics
of running an independent convenience
store, it is not easy for the independent
retailer to match competitor's prices. This
inevitably results in their shoppers taking
the experience of the brand, and buying the
product elsewhere. Better retail training at
point of sale can help to reduce some of
this loss of trade.
Move from sales role to
If the supplier shifts his perception of
the role of the independent convenience
retailer from that of a sales function to a
marketing function, then it becomes easier
for the supplier to classify at least some
of the cost of independent calling as '
consumer advertising'. And it indeed makes
sense to see the independent outlet as an
interactive consumer advertising medium.
In fact, given the increasing fragmentation
of traditional above-the-line media, it
could be said that a well-motivated and
supported convenience retailer could have
more brand impact on the consumer than
With this change in stance, it becomes
easier to justify the allocation of say 50%
of the cost of independent coverage to
the brand's consumer advertising budget.
With this increased level of investment
in a neglected channel, it becomes easier
for pro-active suppliers to insist upon full
compliance at point-of-sale in exchange
for the help and advice they provide to the
If the convenience retailer is given the
role of brand ambassador and is given
regular focused help, it becomes essential
that the independent salesman be trained
to be a mini-CEO of the territory, in the way
that a Key Account Manager is regarded
as a CEO of the major account or a Brand
Manager is regarded as a CEO of the brand.
In fact they all become business managers
of business units, with responsibility for
sales and profitability.
The supplier's sales force will need skills
in identifying a retailer's potential in
fulfilling the brand ambassador role, and
have sufficient retail business consultancy
and management skills to help retailers to
improve. They should also be able to train
shop staff in optimising every contact with
the shopper, on behalf of the brand.
This training of shop staff should also
include skill development in selling and
sales-promotion in order to ensure that
sales lost to other retailers are kept to a
minimum. For the supplier there can be an
additional gain though the increased skills
developed in its own field force.
Longer term, this focused drive to
improve the impact of the independent
convenience retailer will not only dilute
some of the major chains' influence in the
Australian market, but in the long term
will also help to ensure maximum choice
and value for the consumer. The ultimate
benefit however, will be in building and
maintaining brand equity via the 'living
Allowing the market to evolve 'naturally'
could possibly result in the opposite....
Optimising the output
How to move the independent convenience
retailer from a sales to a marketing function
First, it is essential that marketing and
sales really assess how the consumer
interacts with the brand at point-of-sale,
ideally by direct observation in a sample of
convenience outlets. In other words, sales
and marketing should conduct joint store
visits both to observe consumer-shopper
behaviour and also to interact with shop
staff. Establishing a dialogue with the owner
and staff members will help in interpreting
usage and attitude of shoppers at various
stages of the usage lifecycle.
Bearing in mind that convenience shop
owners not only have a desire to remain
independent but usually have a deep and
absorbing interest in retailing, they can be a
vital source of fundamental insight on both
the category and the company's brand.
Sales & marketing involvement
Direct contact with marketing, tempered by
the presence of sales, can help shop-owner
and staff to focus their efforts in converting
shopper-interest into a sale, in the aisle.
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