When store size shrinks, where will brands sell?
Few are talking about it much because the store counts aren’t plentiful yet.
But the eventual rise of the 15,000 to 20,000-square-foot food shops—which are similar to the Walmart Express and Tesco Fresh & Easy formats—will help shoehorn retail banners into densely populated markets. At the same time, they’ll intensify the competitive scramble for display space among CPG brands.
Simply, these stores will only be able to show a fraction of the 50,000 SKUs common in so many superstores and combos.
Where will the brands that lose their shelf space sell in the future? Will they find their markets online through Amazon or Alice.com, or perhaps Peapod or Fresh Direct? Manufacturers might sell directly more often to consumers off their own websites. Or retailers may decide to sell some products only through kiosk, smartphone or online ordering. The smartphone shopping stops on commuter rail lines by Tesco in Seoul, South Korea and Peapod in Chicago suggest how this might develop.
The Lempert Report offers another suggestion for brands—to sell internationally. But not in the conventional sense requiring brokers and other intermediaries to establish distribution in physical stores.
The new sales model we have in mind is for brands to contract with websites such as Taobao.com in China. Why? It is, according to a China Daily report, one of the largest online food-sales platforms that allow a food-curious population to access products from other parts of their country or the world.
During just the first four days that a week-long documentary A Bite of China aired in May, nearly 6 million people searched for snacks and regional specialties, and more than 7 million orders were confirmed in related food categories, the report said. It also cited Taobao data, which suggested that more than 10% of 220 million people living in Shanghai bought snacks online in 2011.
Brand marketers might rightfully be wary of data from unfamiliar sources. But we believe with due diligence and sound export practices that brands can carefully and smartly find ways to access global populations. Aggregator sites like Taobao could be worth exploring as potentially efficient pipelines to international consumers representing growth.