Monday 5 January 2015

The Squeezed Middle - a surplus opportunity for 2015?

As we enter an unprecedented trading year, it is tempting to regard last year’s and 2015’s anticipated cut-backs as negative, and even causing some nervousness for those that are experiencing unprecedented sales growth, perhaps we should view the new market differently?

Instead of regarding the prolonged downturn in demand as a continuing spiral, how about regarding it as the elimination of surplus, with demand gradually working through the surplus that has resulted from 30 years of credit-fuelled growth?

In other words, in the way that post-Christmas dieting has already begun to yield results for some, so too the savvy consumer has spent the last year re-assessing and modifying their purchasing behaviour in the following ways:
  • ‘Making do’ with existing food/non-food stocks and leftovers
  • Food wastage being ’corrected’ by the weekly shop
  • Less ‘wasteful’ car journeys to out-of-town superstores when a local shop can be more convenient, a source of exercise and helps to reduce car running costs...
  • First-hand discovery that discounters are ok, that private label is worth including in the ‘making-do’ repertoire, and can even be ‘better than brands’ in some cases...

Where is this headed?

The above has combined with retailers’ discovery of the under-used tail in large-space retail, a fall in land-bank values, the inevitable closure of at least 20% of mult’s existing selling space, to point us at unprecedented cut-backs in consumer and retail demand in 2015, in order to absorb the now unwanted surplus. In the process, the retailers will rationalise ‘over-lapping’ brands in many categories, in order to simplify the retail offering at point-of-sale

How does it affect you?
‘…if you need to ask….’

What to do about it?
Patently, there is a need to reassess fundamental demand for your brand, vs available alternatives, and cut back obvious surplus, before the consumer/retailer does it on your behalf...

But keep in mind, we are talking about ‘surplus to demand’.

In other words, if we cannot make a case within the business for a real place for our brand, in a deal that is ‘obviously’ better that that available elsewhere, we are simply delaying the inevitable.

But, the consumer still needs our product. Now we need to help them re-appreciate our brand...

At long last we have reached a trading year that will eliminate the surplus and as a result, holds genuine opportunity for those that have the courage to go back to the fundamentals of consumer and trade need-management, faster and better than the other guys…

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