By Simpactful Partner, Heather Burgess
Over the course of the past 9 years, Simpactful practitioners have been brought on by numerous C-Suite teams and boards to help some extremely well-known brands pivot their channel strategies. These brands are household names in Mass and Luxury Beauty, Grooming, Vitamins Minerals & Supplements, RX Health Care, Household Goods, Décor, Food & Beverage, Durables, and more. Importantly, we have also helped several brands avoid costly channel expansion by helping them realize they were not yet ready.
So, what are the common reasons brands change their channel strategies? The forces driving the shift may be external, such as rapidly shifting consumer behavior, shortages of labor, competitive threats, pivoting retailer strategies, emergent categories, or sharp swings in access to funding and capital. They can also be internally driven by things like diminishing customer acquisition, and marketing returns or increasing costs to serve that impact the Brand P&Ls. Another frequent driver is new ownership or stakeholders that are the result of a divestiture, merger, acquisition, partnership, or new investment stake.
How long does it take to make a channel shift? Under ideal circumstances, these major strategy shifts are initiated 18-24 months before the change is required, particularly if they require Brick & Mortar shelf space. However, the dynamics of today’s environment don’t always align with what’s ideal. Whatever the reason (or the timeline), Simpactful’s team of multi-functional experienced Brand and Retail practitioners are here to help! By staffing the right experienced team, we have been able to help leadership teams cut the time required to pivot significantly. We took some time this week to capture a few of the key learnings we have had along the way:
- Structure the Work for Success: Business model changes require executive sponsorship, frequent access to senior leaders, and a collective team with the right skills and experience. Simpactful often helps to provide both know-how of alternate channel models, as well as capacity to augment key internal knowledge-holders, and to take on key pieces of work. Examples include developing price-pack architectures, establishing new supply chain or logistical capability, creating the channel pitch, and defining new marketing models.
- Assess the Landscape: Before proceeding, it is critical to conduct a 5C analysis and often to go deep in the 2-3 critical areas that will drive the success of the new or expanded business model. This includes driving clarity on critical company KPIs and requirements from the channel shift. On recent projects, we have helped to conduct blinded interviews with buyers and senior executives within potential retail partners, evaluated current supply chain costs and capability to support a channel shift, summarized retail strategy changes and project implications, and completed competitive or market deep dives.
- Articulate a Vision and Strategy: With a Landscape Assessment in hand, internal success criteria and expert knowledge, it helps to draft a lighthouse vision for the project, and strategy for key Where to Play and How to Win choices. This strategy may shift and evolve as work commences and new learnings emerge, but charting a course will help teams work efficiently.
- Overcome Remaining Stakeholder Alignment Obstacles: Channel shifts carry risks, rewards, and costs – and a vision and working strategy may not be enough to get all stakeholders to proceed. We have seen projects stall based on Board of Directors, Private Equity or Bank Investors, C-Suite functional stakeholders, or even external partners such as technical or raw materials suppliers, co-manufacturers and or commercial incubators. To garner full support, it is often necessary to dimensionalize the risks, rewards, and costs in a way that speaks to holdouts. For instance, it may be necessary to develop a financial model that articulates the risks of waiting, model risk-adjusted size of prize scenarios, or use channel sell-in timelines to highlight the CPS pinch points.
- Design with a Clear Eye to End-to-End Execution: It can be tempting to focus on the channel portion of the change only, but the reality is that shifts in channel strategy typically touch all aspects of the business. Shifting or expanding into new channels often requires additional supply agility, supply capabilities, or order fulfillment requirements. You may need to book profit and revenue differently, which could alter your P&L or how investors perceive your performance. Product and service assortments may need to be adapted and with this can come the need for a new Omnichannel price-pack architecture. Shifting how you go to market could also alter your brand’s Legal or Regulatory risk profile. Said differently, it is important to have advisors who can anticipate potential implications and ensure the business is ready versus recognizing mistakes when it is too late.
- Pitch Like Pros to Pivot: Simpactful is unique in that we have Commercial Planning experts, former Channel and Customer Sales executives and Retail executives. Together, we have helped many of the brands you know not only shift strategies but developed and even delivered compelling pitches to retailers. To do this, our Commercial teams engage early. They are skilled in aligning scope to meet channel priorities or requirements from shelving heights and aisle traffic opportunities to compelling margin or revenue growth levers. Together we have helped well-known brands transform their businesses through new channels.
Considering a shift in channel strategies? Simpactful can help! Whether in the early stages of mapping out a vision and enrolling all stakeholders, or trying to pivot on a dime, Simpactful’s team of experienced experts can support you. We are not afraid to roll up our sleeves and work with you to create and/or to execute your vision. Contact our team today at contact@simpactful.com or 925-234-6394. Visit www.simpactful.com
