Insights

Rules of the game
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Rules of the game

Predicting your probability of a successful listing at discounters

With consumer disloyalty on the rise and growth and return on investment (ROI) on everyone’s minds, it’s increasingly important to make sure that every move you make as a retailer or manufacturer counts.

This importance extends to your strategy at hard discounters. How can you ensure that your discounter listing not only leads to incremental growth, but also does not jeopardize your existing retailer relationships or cannibalize your sales at other retailers?

To help manufacturers decide when and when not to list at a hard discounter, we’ve identified several factors that can help predict the probability of a successful listing.

BRAND POSITION

First up is your brand’s position. Does your brand have a unique positioning in the market? How’s your brand awareness? One risk when listing at a hard discounter is that your other retailer partners might take retaliatory actions. When your brand has unique positioning, it reduces the likeliness of adverse reactions from other retailers such as delisting and price cuts.

PRICE & SIZE

One major faux pas when spreading your assortment across discounters and retailers is to provide the same product/strategy across both. Differentiate your offer between your discounter and retailer partners, so they don’t feel direct competition.

Special pack sizes, for example, tend to see higher success rates at hard discounters, as direct price comparison with retailers is harder.

When examining your opportunities, take the promotional pressure of the market into consideration. The higher the pressure in the overall market, the slimmer the chances of success — as other retailers can use promo pricing to undercut a discounter’s shelf price.

ASSORTMENT

It’s well known that a stable assortment of a brand or category can have a positive influence for the manufacturer and discounter. Consumers can count on their brand being available at the discounter, and the discounter can count on existing purchasing patterns to determine their assortment strategy.

For the food and beverage categories, offering a wide assortment on the top SKUs is quite beneficial for the discounter — attracting new buyers to the shop and offering a point of differentiation versus competitors. This viewpoint is important to manufacturers to understand, as they can anticipate that their discounter partner will be very interested in listing your top brands.

For the non-food category, however, offering a wide assortment tends not to deliver return on investment for the discounter. As discounters often aren’t able to handle all the needs of the non-food target groups, particularly in body, hair, oral care and feminine hygiene, it’s widely recognized that offering a wide assortment of non-food isn’t an effective way to grow. These category differences and perceptions are important to keep in mind when discussing your strategies with your discounter partner and predicting your potential return.

For both food, beverage and non-food, when considering which brands to list at discounters, bear in mind that discounters tend to favor top sellers. Offering smaller brands can lead to a risk of delisting and might not be worth experimenting with at a discounter.

CATEGORY

Not all categories are treated equal at your typical discounter. Before listing your product, consider whether the brand and discounter are a good fit. For example brands with a higher purchasing frequency and impulse purchasing pattern can expand their consumption by increasing overall distribution, so listing at a discounter is a good fit.

When choosing your discounter, ask yourself if they can provide the necessary competency in your category — including store and shelf layout and assortment strategy — to ensure your efforts will yield a return.

REACTIONS

When listing at a discounter, there may be knock-on effects for your existing retailer relationships and for your sales at their banners. While being the first brand to list in your category at a discounter can be very beneficial to grow overall distribution ahead of the competition, some retailer partners can react more heavily to the first discounter listing in your category. Retailer reactions to listings at discounters can range from partial delisting to less support. To anticipate potential reaction, ask yourself if your brand has a unique selling proposition. If so, retailer reaction is usually limited.

Lastly, before listing your product at multiple discounters, consider potential risk. Often, competing discounters will delist your brand or decrease your price, making it hard for you to recoup losses, much less get a return. Consider this carefully when managing your listing. Interested in more insights on discounters? Contact us.