Retail Resurgence16 Sep, 2010 By: Patrick Cauley Response
When tasked with bringing a low-priced present to a Christmas grab-bag this year, I stumbled upon As Seen on TV aisle at my neighborhood CVS.
Khubani discusses problems with knockoffs where mom-and-pop retailers will get shipments of fake Ped Eggs. Smith notes the growing number of retailers now with private brands. “Retailers are competing more with the manufacturers than before. They’re still creating shelf space, but they’re personally competing with other manufacturers,” he says. However, there can be simple problems related to supply and demand that need special attention.
“Inventory positioning is important. As these items hit and take off, once they’re placed at retail and they’re also flying off the shelves on the direct-to-consumer model, I think the retailers get very concerned if orders aren’t being filled in a timely manner,” Doll says. “It’s a good problem to have when demand outweighs supply, but it’s also risky for the manufacturer. There can be some penalties from the retailers from not selling at retail.”
Furthermore, she explained that when it’s simultaneously being marketed on-air and being sold in retail, when there’s a pinch, direct-to-consumer orders are often filled first. “It’s a tough model because when things are hot you have orders coming in from all avenues,” says Doll.
Smith contends that DR marketers must understand the business model of the retail channel they’re going into. “You’re used to spending a certain amount of money on media or search, but understand that with all the channel margins, slotting allowances and back-end programs, you have to chalk it up that those are probably going to offset each other. Look at retail probably as incremental growth for you; spreading your bets a little bit more on the table and diversifying a bit,” says Smith.
Buchbinder finds that upfront talks with media buyers continuing on a consistent basis can help quell issues before they exist. “Your media buyer understands how to build a more holistic approach to this item or brand as you’ve seen retailers go from hodgepodge to no space, to going to larger set ups and better locations,” he says. “The whole media strategy becomes more specific. In the simplest forms, it’s understanding the value of cutting down from a 120-second spot to a 60-second. It’s understanding the role that retail plays in the overall lifecycle of the brand and aligning your retail strategy appropriately, and that may be making changes in how you approach your media.”
Doll also attests to media’s importance. “We definitely see a link between media buys and sales off our shelves. As Seen on TV products have a long-lasting shelf life because off all those media impressions that our customers have. That’s a huge advantage to this product category. We have hardly any manufacturers or suppliers that do their own marketing,” says Doll.
The experts agree that the opportunity is still quite large for DRTV brands to build significant distribution and incremental sales with retail partners.
“One tool that you have if you’re going from the DR world to the retail world, is that you already have the story down — you have a strong story about why consumers will buy your product. So now you’re just trying to reach the people that won’t necessarily buy direct or haven’t been exposed enough to pull the trigger,” says Smith.
Doll sees huge growth potential. “We have a lot of belief in this category,” she says. “It took us a while to go into the arena, and we have had sustained growth with not a whole lot of change. We’ve had items that do well, then go on TV and do exceedingly well, and then they normalize into still an acceptable rate of sales for us. We predict it to continue to grow at Anna’s.”
Smith thinks marketers should expect to see more mainstream brands, particularly in tools and consumer electronics, trying to use DRTV as a differentiator. “They may already be running advertising on their own, but they’ll weave the sell in where it’s a sell for the retailer and the product,” Smith says. He references Home Depot and Dremel Trio as another recent product and retail advertising partnership.
“Certainly gone are the days that retailers and suppliers alike look at the As Seen on TV category as a thumping ground for yesterday’s goods,” says Buchbinder. “This is a space for branded goods that are supported properly on TV and are items that are evolving into brands.”
His challenge to the DRTV industry is to keep hitting it out of the park and developing great items. “As long as the industry does its part, the retailers are going to want to continue to maintain or grow initial space,” he says.