Strategy: Solving The Power Retailer Oligopoly Problem.

Let's say you find in your market three or four large retailers that control more than 60% of your sales. That's a good example of a Power Retailer Oligopoly*. Here's what is probably happening:

• Customer choice is limited. Prices may be fixed.
• Retailers dictate to manufacturers what to make - to fit a price point, or gap in their range
• Big brands become more invisible than the retailers – products are merchandised by retailers according to price
• Manufacturers become dependent on a few retailers to deliver sales numbers
• No direct communication with consumers. Manufacturers lose the connection to the customer

 

Solution? You decide to implement a direct sales policy to provide customer choice.

This is not an easy option - it's difficult to set up a quality sales channel. But you find the biggest issues are internal:

• Selling direct is perceived as competition by your Power Retailers. 
• They don't like it (and they let your salespeople know)
• Your direct channel can't be competitive on price
• Your direct channel can't have more favourable stock conditions 

And so on…

The Directness Solution:

We have had experience of both direct and indirect sales operations, and so have a unique understanding of the issues involved. We have worked with companies to help them understand all the aspects of the problem and provided strategy consulting that resulted in success.

Usually, we find that focusing on the Customer Viewpoint is a great starting point. We like to refer to the excellent books: "The Tipping Point" by Malcolm Gladwell, "The Ultimate Question" by Fred Reichheld and "The Long Tail" by Chris Anderson.

Some elements of our strategy plans have included:

• Understanding business benefits and ROI of direct sales
• Stakeholder consultation (including retailers) to formulate policy
• Rules of engagement documents
• Internal communications
• Marketing plans
• Pricing baskets
• Demand generation
• Lead management (passing to channel)
• Balanced Management Scorecards and Compensation plans 

Execution and management change has been driven with Six-Sigma Methodology.

Measurement / analysis of customer using Net Promoter methodology has allowed us to get customer feedback and prioritise change. And we have found that it's hard for Power Retailers to argue with the Voice of the Customer. 

Finally, because of our wide channel marketing experience, we have been able to empathise with channel partners and communicate the benefits of a direct sales strategy internally and externally.