Experts lay out post-pandemic retailing strategies
As detailed before in these pages, for many categories of dietary supplements, the coronavirus crisis has been a boon for sales. Consumers have flocked to the category, seeking out in particular any product with ingredients that have an immune support tie in, like vitamin C and zinc.
Some companies have responded with extraordinary measures. Bloomingdale, IL-based NOW, which manufactures many dozens of different dietary supplements, reported mandating Saturday overtime shifts for its manufacturing plant that was already running three shifts, five days a week. This is to keep out of stocks to a minimum in an effort to satisfy existing customers while also trying to retain new ones.
Before the crisis hit, the ecommerce sales channel was still a small subset of the overall retail picture. Brick and mortar sales across all consumer categories still accounted for almost 90% of all transactions in 2019. But online sales were growing at almost 10 times the rate of sales off of physical shelves.
Many consumers are now purchasing online for the first time or are expanding their use of the platform. This is either because they fear going into stores or the items they are seeking are sold by retailers who have been forced to close their brick and mortar outlets. Observers postulate that will give the shift to online retail added propulsion post crisis.
Digital marketing is its own beast
Marc Brush, former editor of Nutrition Business Journal and principal in the consulting firm Bend LLC, said brands need to having a multifaceted plan in place to capitalize on this trend. It requires skills that might not be easily found within a more traditional organization.
“If you've had a good stretch over the past few months but rely heavily on terrestrial retail, the tea leaves are increasingly obvious here. Buckle down for some tough times ahead as the pandemic hits consumers more deeply in their pocketbooks, and invest in direct-to-consumer. Budget for it. Prioritize it throughout the organization. Any new normal after COVID-19 can only accelerate the migration to sales online via e-commerce,” Brush told NutraIngredients-USA.
“Go-to-market strategies for digital are not an adaptation of terrestrial retail. It's a total realignment, with markedly different approaches to product development and fulfillment. You're going to need two plans, two teams with matrixed responsibility, and two timelines. Prioritize speed, testing, and iteration for the digital side,” he added.
Steve Hoffman, principal in the firm Compass Natural Marketing, said if brands can quickly beef up their online presence that can capture new consumers who are spending a lot of time on their screens.
“For new product innovators, now is a very good time to explore e-commerce opportunities, through your own website and/or recognized e-commerce retailers such as Amazon, Thrive Market, Anavii Market (if you’re a hemp brand) and others. Just be sure to put some marketing and PR dollars behind these efforts,” Hoffman said.
“Working with social media and Google advertising, engaging social media influencers, and marketing with online healthy lifestyles publishers and e-newsletters, you can get your brand in front of viewers that are spending so much time in front of our desktop and mobile screens,” he added.
Amazon: Salvation, or straitjacket?
Amazon is of course the 800-lb gorilla in the online sales room. Brush said brands have to plan for success on Amazon, but for a digital strategy to have legs, it needs to look beyond that platform.
“Hire to Amazon. If you don't have someone looking at Amazon specifically, fix that. There are specific skills and strategies involved with a higher degree of complexity than you likely expect. The days of viewing Amazon as a benign frenemy for stealing share with aggressive discounting are gone,” Brush said.
“But don't rely on Amazon. Amazon is often a black box for consumer data, and you want access to that data over time. The smart companies I work with tend to pursue Amazon aggressively with a concomitant strategy to build a strong commerce platform off their own site, with full access to that data and valuable analytics drawn from it,” he said.
New products will be necessary to grab post-pandemic market share
Hoffman said there is still huge post-pandemic opportunity in brick and mortar outlets, and to compete there, brands are going to need new products to offer.
“Brick and mortar and e-commerce grocers are all seeing an uptick right now due to the coronavirus and the fact that people are spending time at home. According to some brokers and distributors I’ve communicated with, brick and mortar retailers may still review new products during this period of pandemic crisis. However, the products should be what might be considered an ‘essential’ product, and distributors and retailers will want assurances that you can meet demand with solid inventory and supply chain,” Hoffman said.
“According to leading distributor KeHE, their overall category management and merchandising team remains heavily focused on innovation because they know that when retailers do get back to new item and category reviews, they’ve got to have a robust line to offer. As such, KeHE, UNFI and others have established links on Rangeme.com for vendors that want to connect with the distributors' category management teams,” he added.
Comprehensive engagement strategy
Whether it’s to drive online sales or to drive consumers to physical shelves, online engagement with consumers will be ever more important in the future, Brush said. But that’s evolving, and with more choices, and perhaps some degree of consumer fatigue with so many competing platforms, the picture is more complex and costlier than ever.
“Social media is neither cheap nor easy. Many clients I work with are seeing decreasing value from the major social platforms, with any of that derived value requiring more effort and investment. That means staff, creative talent, and consistently nurtured networks of influencers and ambassadors. No one platform, like Instagram, offers salvation. It's all about a consistent, overall strategy with social tailored and optimized for each platform's strengths,” he said.
