Gaining a foothold in a new retail channel

December 7, 2015By Behind the Shelf Blog, Industry Intuition

by Steve Choate

When was the last time you started a home improvement project without first understanding the needed enhancements or looking at instructions/directions on how to complete the repair? Being a stereotypical male, I usually do not read instructions before tackling a project. This often results in the wrong approach and additional trips to the store. Not reading the directions has also led me to having to take apart the project and start over from scratch – costing me time and money. If I had only taken the time up front to read the instructions/directions, I would have been able to plan out what materials I needed as well as the necessary steps to take to successfully finish the project.

The same is true for a manufacturer trying to move into another retail channel. You should definitely look at expanding your reach, however, you need to make sure you read the “directions” before moving on with this improvement. make sure you read the “directions” before moving on

First, you need to fully understand your current channel and the role your items play in it. What makes your item successful in this channel? Why are customers buying your product over your competitor’s items? Who are your customers? What are your item’s top benefits and features that make it stand out on the crowded shelves in your current retail channel? What are some of the shortfalls of your product in this channel? Is it as successful as you want it to be? What factors would make it even more successful in your current channel?

Once you fully understand the status of your brand in your current channel, you can then look at moving into another channel. You’ll need to look at factors such as:

  • Which channel is missing items like mine?
  • Do I have the expertise, resources, and time to enter a new channel?
  • If I enter a new channel, will I be able to devote time to my original channel as well? (You do not want to ignore your existing customers as they are the ones who are allowing you to expand.)
  • Which channel has demographics that cross-over with my current channel?
  • What other channels do my current customers shop in?
  • Is my item right for these types of retail outlets?
  • Will my suggested retail price fit the pricing structure of this channel?
  • Do customers expect to see my type of item in this new channel?

Each retail channel operates differently from one other. You need to do your homework and preparation before jumping into a new channel. Not understanding the nuances of the new channel can cause delays in entry, cost extra start-up dollars, and may even cause you to start over. All of this will impact your overall business.

Read the “instructions” before you enter a new channel. Like the old saying goes “Measure twice, cut once.” Up front research will help minimize costly mistakes and improve your chances of success in entering the channel.

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