MANAGING POTENTIAL DTC CONFLICT

Taking that step towards Direct-to-Consumer (DTC) can be daunting, especially if you are primarily a retail distributed brand.  And I am going to level with you, your retail partners are unlikely to be thrilled at the news.  However, that doesn’t mean that they won’t understand. Helping them to identify the positive impact this will have not just on your brand, but their sales, is the key to executing the transition (mostly!) conflict free.  And JDS are here to help you do just that.

First of all, let’s remind ourselves of the trajectory of internet sales as a percentage of total retail sales.  It was already on a steady upward trend, and then COVID-19 struck and forced it in to hyperdrive.  Suddenly, what was considered a perhaps medium to long term strategy for a lot of retail- oriented brands, has become a priority.  But the major stopper? What about your retail partners?

So, I want to encourage you to . . . ‘Be the buyer’.  Put yourself in to your buyer’s shoes, and ask yourself the question, ‘What would you do?’ or ‘What could you do?’.  Appreciating what they will be thinking, and feeling are key to moving forward sensitively and positively.

There are two core elements to consider within this:

1. Brand strength:-

   1. Do you have a strong market share?

   2. Do you have a strong demand from end users for your products?

2. Category dynamics:-

   1. Is it brand led? Value led? Price led? Design led?

   2. Is it more brand or commodity?

Here is the key thing to understand.  The stronger the brand preference in your category, and the stronger your brand is within that category = the more difficult it is for retailers to respond in a negative way.  Ultimately the trick is to avoid doomsday thinking.  It is easy to be drawn in to believing that by day two, you will lose all your listings within the retail arena.  This is incredibly unlikely, especially if you proceed sensitively (and having a strong brand, in a competitive market with help too).

With all this in mind your next step is to answer the following:

If you are already selling D2C AND your trade partners are aware then great news, you can just proceed straight to the build (check out our D2C Strategy framework).  If you aren’t already selling D2C or if your trade partners aren’t aware then the JDS recommendation is to create a ‘Go to trade’ brief.

Be early.

Be honest.

Be prepared.

The early bird catches the worm (so to speak) with this one.  You need to be prepared, within reason, to be as transparent as you can, as quickly as you can.  And you need to be prepared for initial kickback and compromise. 

The truth of the matter is there are actually genuine benefits to embarking on this journey for your retail partners:

• Increased marketing investment = Brand / category demand growth = Trade sales growth

• Data acquisition = Customer insight = Brand development = Demand growth = Trade sales growth

You wouldn’t necessarily be waving this in front of their face, (red rag and bull scenarios to be avoided), but these are indeed clear and real upsides to the D2C model.  Your brief should help to break down some of the myths and misconceptions and help guide them to a mutually beneficial compromise.

So, what should you include in your GTT brief?

Let them know the WHY:

• Are you reaching out to new consumer groups?

• Do you want to test new products and / or propositions before implementing them into the retail space?

Tell them HOW:

• Product

• Pricing

• Advertising

• And highlight the measures you will take to avoid direct competition.

And finally, WHAT (further) support will you offer:

• Additional trade marketing support.

• Footfall / traffic driving advertising.

• Look at ‘Shoppable media’ for collaborative advertising campaigns.

The reality is, the retail landscape is evolving and Direct to Consumer is no longer an IF scenario, but a WHEN.  And if your ‘when’ isn’t ‘NOW’, then what are you waiting for?