- Original entry: 5/15/2017
- Updated 6/25/2017
There is huge disruption going on at all levels and categories of retail, as far as I can see.
This is causing what I call distortion.
Distortion in that some brands I see that are killing it at retail, yet cannot get more SKU’s placed or placement in more locations because the retailers are in such disarray.
Or, retailers are under such profit pressures that they are taking it out on their existing vendors, raising tradespend, or extorting exorbitant tradespend fees from new brands that are killing it online, and could probably do the same offline, but because the retailer is in such dire straights, the vendor cannot afford the tradespend.
This is creating distortion for the brand that wants to grow and could grow, and the retailer who should be scaling them more but is not, which means the brands and retailers are seeing less sales and the consumers are also not seeing these products to purchase. This distortion is far from creating a more efficient marketplace where everyone benefits.
I don’t see a way around this, unless vendors are willing to pay the extortion (most are not or cannot), or retailers get their acts together (most are so legacy driven in their systems and mindset, that this also is making change a herculean effort). We probably need to see more established retailers under more pain before they can change, and the marketplace will continue to oblige in this area, which in the end, will be good for consumers.
[6/12/2017 Update]: With the AMZN/WFM tie-up, that pain is now getting to be much more acute.
But the brands that cannot get more distribution, they need to focus more on selling direct-to-consumer, because as of last data I have seen, most consumer start product search/purchase inquiries online first.
I would be interested in knowing what experiences other brands are having in retail channels. Are you seeing the same level of distortion for your brand as I see? Please comment below.