Bricks-and-mortar retail stores are still a fundamental part of the marketing mix. They are where you can bring your brand to life by directly connecting with the customer and validating all the promises you have made through your other marketing channels. Retail stores are also likely to be the point at which the final purchase decision is made to buy into the entirety of the brand offering. This is the premise on which brand advocates are established.
“Retail stores enable brands to deliver on their brand promise and to actually validate their brand proposition.”
However, delivering the right customer experience in-store is a challenge. There is a highly complex supply chain that must be managed successfully to deliver the required experience. It starts with the shopper and how they relate to the brand, the retail environment, the product and the overall Purchase Decision Journey (PDJ). It requires expertise in branding, shopper marketing, retail design, product engineering, production management, logistics, installation and merchandising.
Maturity of industry
You would have thought that with this level of complexity, the market would be well developed and would support a fully integrated approach. However, you could not be further from the truth.
“Sourcing retail fixtures and POP materials is like shopping in a bazaar as you have no real idea on the true value of what you are buying.”
Fact; the sourcing industry for retail fixtures and permanent point of purchase materials is highly fragmented. There are 10,000’s of suppliers. Most companies tend to operate at country or regional level and it is highly questionable that any of these have any true global scale. The industry is also quite volatile as personnel move from one company to another and take clients with them. The largest firms may have a 2-5% market share in a region. The supply chain also includes multiple layers with specialist factories, hub suppliers, agents, distributors and POP supply companies. These layers fragment the final outcome as well as building inefficiency resulting in higher costs.
However, there are now signs that the industry is consolidating. New market entrants have arrived with the express aim of aggregating demand across countries and regions and in some cases even globally. These third party marketing service providers have come from different positions of strength such as print management, e-procurement, logistics and branded giveaways. But the key question is “do they truly understand how to create an innovative and compelling in-store experience?”
“Third party marketing service providers will only succeed in retail execution if they can add value above and beyond margin reduction.”
Changing client needs
Clients are helping to drive this consolidation as they strive to gain more control over the entire shopper marketing supply chain and build differentiation in the overall experience they create for their customers. They are seeking to gain control by:
- Decoupling material design from actual production
- Gaining control over all technical specifications
- Better value engineering items (currently engineered for supplier benefit)
- Enabling like-for-like cost benchmarking and tendering
- Satisfying need for flexible supply / local production from ”emerging markets”
- Blending sourcing from different factories / locations to provide the best possible solution
- Modelling entire global supply chain to deliver best possible price in each market
- Ensuring Corporate Social Responsibility (CSR) and sustainability compliance
It is happening, clients wish to work with a smaller number of suppliers but at the same time to be able to access specialist skills. This requires a new business model. One where experts in their specific disciplines can work together in a seamless integrated way across the entire shopper marketing supply chain.
“You just need one element in a shopper marketing supply chain to be sub-standard for the entire programme to fail.”
The reality is that you need real insight-driven shopper marketing expertise. Expertise that is focused on the shopper and not just on how a display should be designed. This expertise then needs to be combined with engineering excellence and flexibility of supply, to ensure you have the right level of quality at lowest possible cost. These are two very different disciplines. By combining art and science in this way, you have a chance to build brands that can emotionally connect with the customer.
The future of the industry
Reflecting on this vision of the future, I am delighted to announce that LG&P and LeanPie have entered into an equity partnership to pioneer this new business model. LG&P is a leading shopper marketing agency and together with LeanPie we are creating a shopper marketing supply chain that is focused on delivering the most innovative and compelling customer experience for the benefit of the shopper, the brand and the retailer at the lowest possible global cost.
If you would like more information on how LG&P and LeanPie can transform your shopper marketing supply chain, please feel free to contact David at email@example.com