Mateusz Drela, CEO @ RMIQ
Most challenger brands chase storefront placement wherever they can get it. That’s dangerous death trap. The storefronts worth fighting for are the ones where retail media is active, because that’s where you can amplify sell-through, and not just hope for it.
Legacy Brands Have Storefront Retail Down to a Science
All legacy brands understand well the science of storefront retail. They know a product on an end aisle display will sell up to 3x faster than regular shelving, depending on whether it’s an impulse buy or a planned purchase. They know brands with eye-level shelving sell 30-60% faster than bottom shelf, and that even slightly increasing the number of facings a brand has results in healthy double-digit sales increases.
The first company I ever worked for was Procter & Gamble, perhaps the pre-eminent legacy consumer company, and a firm that has had surprisingly few new brand successes over the past fifty years. One reason: they haven’t had to, because their on-site clout at retail has calcified the status quo there. The vast majority of P&G revenue still comes from cash cow legacy brands such as Crest, Tide, Charmin, and Head & Shoulders. In some U.S. counties, P&G has well over a hundred foot soldiers patrolling retail storefronts to ensure their massive trade dollars are implemented optimally. The same is true for other consumer giants such as Nestle, Unilever, and Pepsi.
This legacy scale places challenger brands at a big disadvantage at storefront retail.
Margins for retailers are notoriously thin, sometimes in the single digits. The massive trade advertising sums retailers regularly collect from heavily promoted legacy companies are critical to a retailer’s well-being, even survival.
Challenger brands push for storefront placements because brick and mortar still represents almost 80% of total sales, and prime placement implies a certain status. But it is not likely they’ll push a legacy brand off an end-aisle display, win eye-level shelving or get fair-share facings. Too many overreach on initial product sell-in and end up at the mercy of retailers demanding more trade dollars to ensure sufficient sell-through. Retailers have leverage against upstart, lean challenger brands that they don’t have with legacies, and they use it. This is especially true of small regional retailers and independents, who live even more on the edge and are likely to pressure challenger brands further, or pay late.
Sell-Through Matters, Not Sell-In
I heard one CEO of a challenger pet food brand claim they had 10,000 storefronts carrying their product, and I winced. Sell-through is what matters, not sell-in. At a storefront with no retail media, you carry the product and hope the shelf does the work. Too many stores carrying your product with no way to drive rotation into them is one of the fastest ways for a challenger brand to go out of business.
Retail Media for Challenger Brands: Where the Playing Field Levels Out
Compare this to an online platform such as Amazon, Chewy, or Walmart’s Marketplace. None of them are soft touches to be sure but it’s a venue where the metrics of retail media can tell you what’s working in real time. And while there are still some benefits for bigger brands, the landscape is much more egalitarian. With strategies like conquest search, challenger brands can go profitably head to head with the cash cows of the consumer giants and capture new-to-brand users and market share. Your sales force disadvantage relative to CPG giants is nullified online, while the timeliness of your fresh brand narrative is expanded.
Choose Storefronts Where Retail Media Exists
Challenger brands especially those without deep pockets need to establish their brands initially with two or three synergistic online platforms and a smart retail media program. Retail media can meet full funnel status providing your search strategies align with emerging consumer market trends. This can save challenger brands immense sums of money on what otherwise would be spent on initial awareness advertising. Moreover your storefront retail strategy should complement your online distribution with initial preference for those store fronts like Walmart or Target or CVS where you also have an online presence. A shelf you can actively push is worth more than a shelf you’re merely hoping performs.
Retail Media Platforms Are Where Ready Buyers Already Are
There are now more product searches on retail media platforms than on Google. It’s where ready shoppers go to find new brands that align with their evolving tastes and buying preferences. Online platforms are the level playing fields where challenger brands can cost-effectively achieve new user trial, instead of getting lost in a vast and unfavorable retail arena.
They let challenger brands grow organically through trial and the word-of-mouth that follows from early adopters. It’s also the platform where trial-and-error retail media searches let you fine-tune your brand narrative and gain national access for your fledgling brand.
The Bottom Line
The question for a challenger brand isn’t which storefronts will take your product. It’s which storefronts let you drive rotation once you’re there. Prioritize retailers where retail media is live, because that’s where placement turns into performance you can actually control.
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