Managing and leveraging the routes to markets for consumer brands
We live in a world of change and uncertainty. For those of you who have read The Road Less Travelled by Scott Peck; “Life is difficult” – certainly in our industry right now. However, it is full of opportunity too.
Out of the ashes of profits warnings, norms of up to -10% EBIT, store closures, CVAs and scratching our heads over just how to “put the customer at the heart of an organisation” [a phrase we may soon come to hate] comes a finely dressed Phoenix.
Working with a mix of PLCs, PE and private/family-owned businesses, we have found clarity in just how to think about Strategy, Structure and People. It is simple, clear, and collaborative. It is also one sharp tool for a CEO looking to turnaround, transform or seriously achieve growth in Consumer and Retail companies: DTC.
There has been so much talk about; Direct-to-Consumer. Literally, this movement is about managing and leveraging the routes to market for an omnichannel retailer, brand or consumer entity. Interestingly, the same rules apply regardless of scale, product category or market level. There is a recipe for success emerging for a DTC model; you need to create a product offer for the consumer, wherever and however they shop. You must have a ‘cross-channel-push-marketing’ AND a ‘pull-customer-data/insight’ approach that together inform the commercially creative decisions that are made.
A Chief Channel Officer (CCO) leading Retail, Digital, Wholesale, Franchise, License and International revenue streams together, becomes a natural and sensible model given you are already operating a consumer centric matrix in Product and Marketing/Customer. The silver lining is how much opportunity you may find in creating new channels to market, whether they be brand collaborations or category expansion.
The upsides… there are many:
- Achieves maximum ‘supply-to-demand’ efficiency and productivity, on a consistent basis
- Properly enables a customer-first strategy, regardless of channel, with stronger levels of consumer engagement recorded
- Greater transparency over where money is being made and where to invest
- Establishes a ‘pull’ model for inventory to deliver a profitable sell through
- Results in an agile methodology to leverage growth and slowdown in physical, digital and wholesale channels
- Opens the routes and speed to market for product innovation
- Cost: one CCO as opposed to three Executive Directors reporting into the CEO
- Removes silos in organisations; the reports to the CCO are multi-channel experts under one leader, rather than independent guardians of store, online or wholesale
- Allows business focus on CSR initiatives; sustainability, recycling, health and wellness and employee welfare, working internally and partnering externally
- Will enable the customer agenda to mirror the employee agenda over time
- Elevates the brand on product and service; in many cases it results in the retail operational model moving from loss to profit – the data is showing brands grow more holistically and profitably where channels are led together
- Joint DTC models are showing better global reach, overachieving on CAGR and EBIT growth
- DTC brands make better partners for host stores/marketplaces
- Allows for innovation on route to market strategy, continual test and learn on AI, personalisation, UX experience – in conjunction with CMO and Chief Creative/Product Officer
Points to consider; the structure and layers reporting to the CCO can no longer think or be siloed in their approach. Territorial questions such as “how do we apply this strategy to digital?” or “who owns the customer?” are real red flags. These comments are obsolete, not to mention old fashioned. We are clear about the organisational model best suited to a CEO with a precise strategy, wanting to deliver at pace. It is time to clean up and find a sustainable model and hire the leaders of the future with confidence.
DTC Officers are often succession material to CEO appointments. Starbucks, Levi’s, GAP, Nike, Unilever and Canada Goose are some of the trailblazers; they can’t all be wrong. As we envisage serious and imminent complexity coming from cross-border trade negotiations, we must surely want to make our lives easier with channel integration. Whatever your scale of business, market level or product category, travel forward in one direction, with channels converging. This will enable innovation, creating value and return on investment for the next decade.