It’s old news that the digital channel plays a critical role in the path to purchase―from online research to social media reviews to consumer product ratings, shoppers are researching before they ever set foot in store. Physical locations are no longer the “first” nor even the “last mile” in the path to purchase thanks to online and omni-channel shopping.
Save the retail behemoths, like Walmart and Amazon, most retailers who carry multiple brands and products are unable to keep up with the information needs of consumers. In many cases, manufacturers and brands are becoming the critical source of information, helping to drive sales and educate consumers.
Despite the need for brands and retailers to play well together, there still remains the fear of retail cannibalization.
Retail cannibalization: Similar to channel cannibalization, many brands and manufacturers shied away from creating a digital presence for fear of diverting their partners’ revenue stream.
Example: Levi Strauss and Maytag in the early 2000s had their own direct-to-consumer site but complaints from dealer networks and stores forced them to close it down. Similarly in the food industry, producers and growers were dependant on the retailer to promote their product in-store and influence the buying decision.
However as more retailers produce private labels, from Costco’s “Kirkland” to Macy’s multitude of private brands (e.g., Charter Club, Ideology, etc.), other brands must determine how to stand out and bring value to their retailers, customers, and their own bottom line.
Showrooming is driven by high smartphone penetration rates of 73% in Canada and upgrades to the “net” to be mobile accessible. Therefore having an informational digital presence is essential for manufacturers and brands for consumers who are looking up information on their product while in a store.
The decision to have an e-commerce presence is also beneficial to all parties if structured in a way so as not to undermine distributor/retailer sales of the same brand/product. In some cases, a credit to the distributor for a percentage of the sales (based on where the sale is delivered) is appropriate and helps boost overall sales. For brands and manufacturers the online channel has provided an integral opportunity to connect with consumers and support retailers’ increasing sales and satisfaction overall.
Recall that the buying decision is not always made at the “last mile,” in today’s information era. What are you doing to ensure your product or brand is top-of-mind when consumer’s do their research?
Written by: Suthamie Poologasingham, Sr. Advisor of Digital & Omni-Channel, and Director of Research at J.C. Williams Group
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