Dive Brief:
- Brands will face growing challenges as they navigate bifurcated strategies of trying to ramp up direct-to-consumer (DTC) sales and selling wholesale to retailers, who are also doubling down on digital, according to a new report Forrester shared with Marketing Dive.
- With such a dual approach, brands run the risk of introducing inefficiencies and redundancies into their operations, as well as giving consumers a fractured brand experience, per the report, titled "Brands' Success Relies On Relationships with Retailers."
- Forrester recommends brands integrate their digital commerce and wholesale partner teams to ensure they are efficiently and effectively driving sales, while focusing on being more of a partner with retailers — and less of a supplier.
Dive Insight:
Even as a number of big brands ramp up their DTC businesses, retailers still command a significant portion of consumer purchases. For both approaches, digital has become a more important driving force during the pandemic as consumers are stuck at home. The most successful brands will invest in technology solutions and operational strategies that provide a consistent customer experience without forgetting to meet the evolving needs of their retail partners, per Forrester.
Some brands with more mature digital commerce strategies are already moving toward a more integrated operation. Mars, for example, created a digital demand team, which shares learnings across brands and regions, per Forrester. The candy company is also using Salsify's product experience management system to create a central content engine and reduce the time for creating content.
In another example of streamlining provided by Forrester, Deckers Brands moved to one overall sales target across its DTC sites, corporate-owned stores and wholesale retailers.
Even as DTC becomes a bigger focus for brands, retailers' needs are evolving as many face significant revenue pressures during an economic slowdown, making controlling costs and optimizing their assortments a priority. At the same time, the what, where and when of the shopping journey continues to evolve during the pandemic.
Focusing on investments that enable brands to be more of a partner to retailers will provide a bigger return on investment than selling directly, Forrester found. With this in mind, the researcher recommends brands optimize product information and content management through digitization; improve demand management and replenishment so retailers can better show online shoppers what's available in stores and online; share responsibility for customer service as shoppers increasingly use multiple touch points before purchasing from a retailer; and combine insights to derive deeper customer insights.
Brands that typically invest heavily in trade promotions with retailers to guarantee shelf space in physical stores could think about how their investments can shift to ensure they get premium placement on e-commerce sites, per the report. With many brands reporting that digital promotions on retailer sites are performing better than other digital media or paid search, Forrester recommends brands take a close look at the in-house media networks now offered by a number of retailers, including Walmart, Target, Amazon and CVS. Options like Criteo Retail Media and Intent Media also enable brands to place promotions directly with retailers.
Brands can strengthen their relationships with retailer partners by sharing more complete, high-quality product content and offering more flexible access to inventory, Forrester recommends.
Retailers still deliver a significant portion of consumer purchases even as many brands pursue ways to bypass retailers and sell directly to consumers. To do both successfully, brands must recognize how retailers' needs are evolving and look for ways to eliminate redundancy and improve efficiency, per the report.
