newmarketbuilders at NARMS: Retail Marketers in the Power Position

The 2010 NARMS conference is over so let’s discuss!

I can't imagine a better time for retailers, suppliers and retail marketing services firms to convene ... Retailers' in-store focus has snapped to attention, suppliers are wrestling with unprecedented disruption, and NARM's member companies, whether they work in event marketing, assisted selling, training, merchandising, or demos, sit right smack in the middle of the action between both.

I’ve tied together my observations from the conference and the many sidebars that I had with attendees and presenters regarding the state of the industries (retail and marketing services).

Hey, that’s a good place to start . . . industries-within-industries.  Trade organizations are great for providing resources to industry sectors and for establishing best practices . . . They can also get into a rut that I call industryitis: becoming so insular and self-important that they completely lose touch with the main industry that they serve (in NARMS' case, retail).  Thankfully, I saw little of that at NARMS and in fact, this was one of the most curious, open and, dare I say, NICE groups of people that I’ve had the pleasure of hanging with for a few days.  NARMS has been active for over a decade; however, many NARMS members have been in the business for much longer.  They know when someone new is on their conference scene (as was the case with me and a few other speakers) but I couldn't have felt more welcome.  After my presentation, I enjoyed a series of fantastic conversations about where retail has been and where it’s going.

Chatting with other industry veterans (hard sometimes to put myself in that category but alas, it’s true) is one of my favorite pastimes . . . except when the ones I’m chatting with are resigned, jaded and even bitter.  As much as I hate to say it about my own people, that describes many in the retail industry lately as rationalization (the retail services equivalent being preferred provider programs), private label encroachment, price deflation, margin erosion, etc. become all-too-obvious downers on which to dwell.

Cross another one off the list:  everyone I spoke with, without exception, was positive and determined not just to press through, but also to raise the bar and actively participate in the considerable white space that has opened up around the dark core.  No quitters or haters here, and all eyes and ears were wide open to the possibilities: 

EXPANSION

In my presentation, I talked about how retailers’ claims of category expertise have quietly been replaced by category-agnostic processes and why that is a wake-up call to retail services companies.  That’s how the television buyer across the table from you can take a new position in apparel then move on to international, and it’s also how drug retailers like Walgreens can start selling prepared meals while Best Buy ventures into patio furniture.  In the past, retail services companies (and retail suppliers) differentiated through category expertise: there were food guys, consumer electronics guys, and apparel guys and the consumer electronics guys got annoyed when the food guys dared to encroach on their space.  Some of those silos and the associated territorialism still linger; however, most everyone that I spoke with was actively seeking expansion outside of their traditional categories or they had already made meaningful plays in that direction.  No one begrudged others' progress regardless.

I got lots of questions about how to expand relationships with retailers; everyone got it that they need to strengthen their resolve to establish direct relationships with retailers and go deeper and wider within the ones in which they already operate.  When suppliers and brands are being rationalized right and left, retail services companies can’t attach their future to supplier relationships alone.  Quite a few folks wanted to talk about expanding into new retail tiers as well and a few forward-looking companies were thinking out of the box (store) entirely . . .

Virtual merchandising came up more than once and that’s a good thing, since retailers’ websites are no longer just sales channels (although some aren’t even that) — they are content hubs, marketing vehicles and testing grounds for new concepts, product lines and brands.  Back in May of last year, I blogged on a presentation here in Bentonville by Walmart.com’s Senior Director, PK Van Deloo, in which he touted the benefits of online sampling programs and virtual merchandising.  Bottom line: retail services companies need to be everywhere retailers and brands are and that means online.

STAYING IN THE GAME

Plenty of retail services companies have been humbled recently by preferred provider programs (whether institutionalized or implied). However, I was impressed by the number of companies that were maintaining a long-term perspective on the situation and building for that next review rather than throwing in the towel or looking at the current state of affairs as a permanent situation.  That isn’t Pollyanna-ish, that’s retail reality as retailers sever any ties that bind too tightly and as the line between beta and big bet continues to blur.

VALUE OVER VOLUME

I mentioned portfolio management in my presentation . . . Just as retailers are evaluating the many “positions” in their portfolios, retail services companies are also beginning to implement segmentation strategies rather than treating every opportunity the same (or definining "opportunity" too loosely).

In my presentation, I challenged NARMS' member companies to move away from "selling" and to start positioning.  At a time when the gap between suppliers of choice and “the rest” is wider than ever, I see a tremendous opportunity member companies to leverage their big middle position in a few ways:

1. Mine the gold in the back yard - Platforms and operating models, intellectual property, shopper insights.  Retailers are doing this -- so should you. 
2. Prune dead wood - Old models that are no longer relevant to retailers and that drain resources
3. Layer on new service offerings - Laser-targeted to retailers’ new values (targeted to specific retailers? Even better!)
4. Create branded offerings - Proprietary and/or bundled programs that take a hard right turn away from tactical commodity plays.  It's "all about price" when you make it that way.
5. Develop new standards for partnership - Make retailer relevance, not relationships (with high turnover at retailer HQ, those are fleeting) the top criteria for strategic alliances and acquisitions.  Your partners must be in good standing with retailers or they won't be doing you any favors.

It's going to be exciting to watch how everyone leverages their power position . . .

Did you attend the show?  What were your take-aways?  Share your comments here!