It is stunning how many businesses out there are looking for the next big thing in the industry to the detriment of their current business. In the latest AACS State of the Industry Report for 2015 it was reported that only 25% of Australians believe that convenience stores change their offering enough to keep stores interesting.
So why is this the case?
The reason is simple, every business is looking for the next big thing and it is killing their sales opportunity. The days of iconic brands like Tim Tams, Vegemite and Coca-Cola are over, and the era of “here today and gone tomorrow” is in, so get on board.
So many times I hear from retailers, suppliers and even distributors that there is not enough volume in a new product for them to warrant looking at the opportunity, and this is going to be their undoing. Why?
Because that is the world we now live in. In little over 10 years social media has exploded and now consumers are exposed to more product and choice than ever before. Marketing is using these mediums to communicate directly to consumers and consumers are more informed and have more information at their fingertips than ever before.
It is no mistake that consumers are looking for more choice in-store at the same time that social media has exploded, but here is the kicker. Their attention span is much shorter, so a product that they have demand for today will not be the same in 3, 6 or 12 months.
Entrepreneur.com reported that the product life cycle was now less than 12 months, giving us some indication of how dynamic the market now is. In product development terms there is a process, which can be defined as the time to market (TTM), the period of time from when a product or idea has general agreement and resources are committed to the project, to when the final product is supplied and in-store.
Over the past 10 years it could be argued that this TTM window has grown, as the shortness of a products life cycle, the time involved in getting product on shelf, coupled with the speed at which consumers are accessing product information these days, could make a product all but redundant even before it hits the shelf.
The earlier you get your product to market (without cutting corners or compromising quality) the greater the revenue you can generate because your product faces less competition. In addition, you earn revenue for more of the product lifecycle.
Everybody is looking for that one product that they can just sit in their warehouse or store and not have to do too much other than stack it high and watch it fly. Stop chasing unicorns!
The era of short order runs is here, and if you do not have a position on how to address these “in and out” products in your business, someone else will. Sure the main stayers of the business will still be there, and I am in no way suggesting that this will change, however if you believe in the consumer research, then you need to realise that more product choice in-store and keeping your range interesting for your customers is necessary.
If the explosion of online ordering is any indication, it is not unreasonable to think that this new way of servicing more product to the market could account for as much as 5% of the current $8 billion dollar Petrol & Convenience (P&C) channel (excluding fuel), which is nothing to sneeze at. Not to mention the added benefit of bringing more value to your existing customers, engaging new customers and all the while remaining relevant in an ever changing marketplace.
But this is not going to be easy, because the challenge is that business models will need to evolve to address the servicing of these smaller volume lines, which are currently not there in most cases with traditional operations.
This is where the online players who are efficiently servicing Business to Consumer (B2C) ordering on a daily or even hourly basis are well positioned to take sales and opportunity away from the traditional supply chain models.
I mean, just think about it for a minute and you will see that what I am saying is a distinct possibility. We are talking about big warehouses positioned geographically which by their design are only able to service larger orders in a limited geographical radius on a weekly basis, versus a virtual warehouse that can pick, pack and distribute smaller order runs, even single pick, on a daily basis anywhere in the country via a courier network.
In a world where cash flow is the oxygen of small business, the idea of short order runs 2 -3 times a week, with the added benefit of providing their consumers with a greater range of goods has to be appealing.
Craig Matthews is the MD of Stock Box, with over 30 years industry experience in retail development, specialising in independent retail programs.