Turning the Tables
May 30, 2005,
Suppliers, it's time to consider a painful possibility — that retailers represent an impediment to your long-term survival.
At a recent Retail Forward conference, Lois Huff, the consultancy's vice president of softgoods, pointed out that in our Google society, consumers expect to find anything anytime anywhere.
She went on to predict that such expectations will render similar products of similar quality ever more commodity-driven and more price-driven. Quality, consistency and service will no longer be points of differentiation, she contends. Those factors will be mere jumping-off points.
Who's going to do the more robust job of explaining those differentiated features to consumers, the company that builds the better mousetrap or the company that slaps it on a shelf next to a bunch of other mousetraps of varying qualities and prices?
Suppliers, you know how you wistfully talk about the days when there were 50 department store accounts and 30 discount store accounts? You know how you complain that there are only seven or eight meaningful retail accounts left? You can rewrite the rules by pursuing literally scores of microniches in a consumer-direct world.
Consider the industry's core demographic: Mom. Huff pointed out there is no longer only one Mom niche. There are more than a dozen Mom microniches: executive mom, work-at-home moms, mothers of color, military moms, lifestyle 20-something moms among them.
Certainly, some suppliers have taken tentative steps into the consumer-direct market through TV shopping channels, Amazon, eBay and (mostly in the utility bedding segment) infomercials.
I'm suggesting it may be time to press on the accelerator. This industry spends untold millions on chargebacks, open order discounts, markdown money, co-op ads, slotting fees and the like. What if you rechanneled that money in the direction of the consumer?
Now that retailers consider themselves manufacturers, you can either wait around for them to leave you behind, or you can get up off your old assumptions and compete.
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