A recent article in the WSJ (P&G's Global Target:Shelves of Tiny Stores, Ellen Byron, 7/16/07; Page A1) discusses a retail format in critical overseas growth markets that is surviving the rise of mega-chains: so called High Frequency Stores.

Survive Dominant Retailer Onslaught. Many industry observers initially believed that these independently owned shops would die out as major retailers expanded their reach into developing markets. Instead, high-frequency stores, considered in aggregate, are P&G's largest customer, with Wal-Mart coming in second. Though Mexico is one of Wal-Mart's most successful markets, high-frequency stores are still regularly visited by 70% of the population, P&G estimates. By the company's count, Mexico has 620,000 high-frequency stores. Annual sales total about $16 billion.
Three Strategic Implications for Branded Product Makers:
1. Product visibility: one of the biggest challenges to selling in high-frequency stores. Shops tend to be poorly lit and in Latin America average just 250 square feet in size, P&G found.
2. Merchandising Support. P&G-employed merchandisers visit the stores about every two weeks to tidy the shelves of their products, post signs with the items' prices and hand out promotional items, including posters. Also, sales representatives deliver inventory to stores themselves, often sparing owners a trip to the local distributor.
3. Salesforce Structure. Initially, P&G had its own exclusive sales force in Mexico to supply store owners with its products. Then, two years ago, the company decided that it lacked the scale and resources to maximize distribution -- especially in far-flung regions. P&G began offering basic sales training to independent agents and encouraged them to build their own teams. Today, the company is experimenting with allowing agents and their workers to earn commissions from markups on products sold to stores. By relying on local agents, P&G is also able to strengthen its ties to store owners. This is especially important, since owners can be very influential in the brands their customers choose.
Read More...
No comments:
Post a Comment