fmcg distributors! is there a future for you after 2020?

Eysink Smeets Retail Business Innovators

FMCG Distributors!Is there a future for you after 2020?


Keynote speech forEuropes leading distributor organization for consumer goods.


ESMA KrakowSeptember 18, 2015


Goedemiddag!


Ik benHansEysink Smeets.

www.eysinksmeets.com

eysink smeetseysink smeets

What I will talk with you about.

http://www.eysinksmeets.comhttp://www.eysinksmeets.com


How to be a Distributor in 2020?


How to ridethe Waves of Changes?


How to re-invent your business model?


What game you are going to play in the coming 5 years?


On my way from the airport last night,I stopped off at one of the local Tescos.


Trying to find opportunities for distributors.Big companies own efforts probably puts most on the shelves.


Were these distributed by a distributor?


This might well have run through a distributor.


In the exotic food aisleyes, there will be distributor products.


But how much else?


In fact, most of the aisles I saw last nightare dominated by non-distributor brands.


Then I went to the Sheraton.And try to understand what makes you tick.


Why would this kind Australian gentleman likesome of you help him make Nads into a European success?


In which period of the life-cycle is a distributor his solution?


On which retailer shelves can a distributor place his products?What would be the services of a distributor for that?


What retailers would just love his products?Would they prefer his Landhof brand? Or brand it as their PL?


I want to give you some insights that will help you distributors find opportunities.


And prevent you from making some of the most obvious mistakes.


I will give you a simple game which can help you understand how you can re-invent your business model



Just a a bit about my relevance.



I am a world-wide retail strategy consultant.


My specialty israpid strategy changes for the consumer goods sector.


In times when these rapid changes are needed.


Forconsumer goods retailers.


For consumer goods producers.


I have personally done projects in 39 countries on 5 continents.


In all kinds of mass market retail.

Mars, the Netherlands

Mars, the Netherlands

Ahlens, Sweden

Expert, Europe

Shell



We are talking today about choosing new directions in a time of change.



You talk about waves of change, and yes, there are a lot of changes.


Our job is to help captains of huge shipschange the direction of their companies.

Our corporate client.

Us.


It might be that you have to exit todays comfort zone to travel to the next bend of the S-curve.

Old comfortzone.

New comfortzone.

Scary phase.


It might be that you need a fast turn-around.Help your organisation into the new comfortzone fast.

Old comfortzone.

New comfortzone.

Scary phase.


Predictions are just that.But a good captain knows to plan ahead when weather changes.


Better to be prepared than sorry.



The main trend in all types of retail:the NoCompromise Revolution.



How to position yourself as player in the FMCG sector in these revolutionary times?


The NoCompromise Game.


Its no rocket science.


You will understand it too after this session.


Its a game for the NoCompromise position.


A constant game, with simple rules.



First of all:the objective of the NoCompromise game.



Seduce her,the consumer.


Earn as manylove-chips from her.Mrs.Consumer.



Then:the players in the game.



The Producers and the Retailers.


The Producers of consumer goods or services.


The Retailers of consumer goods or services.


Who is the best seducer?


You are distributors, dependent on how the game is played.

Importer

Agent

Distributor

Etc.

Producer

Retailer

Mrs. Consumer



This is how the NoCompromise positioning model works.



Lets open the box.


Put the players on the board.


And then Ill explain the rules of the game.


Look at the axis that Mrs. Consumer defines.

High Price

Low Price

Low Value

High Value


First there is Price.

High Price

Low Price

Low Value

High Value


What she prefers is not difficult to understand.In most cases Mrs. Consumer prefers Low Prices.

High Price

Low Price

Low Value

High Value


Then there is Value.

High Price

Low Price

Low Value

High Value


What Mrs. Consumer prefers is pretty easy to understand too:she prefers High Value

High Price

Low Price

Low Value

High Value

ValueCompromise

NoCompromise

DoubleCompromise

PriceCompromise

High Price

Low Price

Low Value

High Value


Put together it looks like this.

ValueCompromise

NoCompromise

DoubleCompromise

PriceCompromise

High Price

Low Price

Low Value

High Value


In most corners there are one or more Compromises.Except one corner: the NoCompromise corner.

Love Value

Hate Price

Hate Value

Love Price

Hate Value

Hate Price

Love Value

Love Value



Old thinking.



How conventional thinking plays on the NoCompromise diagram.

ValueCompromise

NoCompromise

DoubleCompromise

PriceCompromise

High Price

Low Price

Low Value

High Value


Michael Porter tells us that you have to make choices.

Michael Porter

ValueCompromise

NoCompromise

DoubleCompromise

PriceCompromise

High Price

Low Price

Low Value

High Value


He tells us that you cannot survive in the Double Compromise corner.

Michael Porter

ValueCompromise

NoCompromise

DoubleCompromise

PriceCompromise

High Price

Low Price

Low Value

High Value


And high costs for high Valuewill kill you in the desirable NoCompromise corner.

Michael Porter

ValueCompromise

NoCompromise

DoubleCompromise

PriceCompromise

High Price

Low Price

Low Value

High Value


That means you are stuck on Compromise Alley.

ValueCompromise

NoCompromise

DoubleCompromise

PriceCompromise

High Price

Low Price

Low Value

High Value


And that is how compromised format positioning happens.Full-service supermarkets, soft-discounters, hard-discounters.

FuS

SoD

HaD



New thinking.



But things have changed in the past 15 years.

ValueCompromise

NoCompromise

DoubleCompromise

PriceCompromise

High Price

Low Price

Low Value

High Value


We have experienced that old boundaries are fading away.

Hans Eysink Smeets

ValueCompromise

NoCompromise

DoubleCompromise

PriceCompromise

High Price

Low Price

Low Value

High Value


ValueCompromise players have moved to the right,while retaining low costs.

HaD

ValueCompromise

NoCompromise

DoubleCompromise

PriceCompromise

High Price

Low Price

Low Value

High Value


ValueCompromise players have moved to the right,while retaining low costs.

NoCo

ValueCompromise

NoCompromise

DoubleCompromise

PriceCompromise

High Price

Low Price

Low Value

High Value


Once NoCompromise players obtain sufficient share, the market dynamics change.


Start to understand the game?


Getting an idea of where the winners will be?


Some examples in the FMCG:Kaufland is a NoCompromise supermarket.


Lidl in Switzerland or Hungary as well.


Gettingit sofar?



The model also helps you find your own position



Being in the NoComprise corner is necessary for you as distributors too.

ValueCompromise

NoCompromise

DoubleCompromise

PriceCompromise

High Price

Low Price

Low Value

High Value


ValueCompromise

NoCompromise

DoubleCompromise

PriceCompromise

High Price

Low Price

Low Value

High Value

Your brand-owner must perceive you to bein the NoCompromise corner.

ValueCompromise

NoCompromise

DoubleCompromise

PriceCompromise

High Price

Low Price

Low Value

High Value


ValueCompromise

NoCompromise

DoubleCompromise

PriceCompromise

High Price

Low Value

High Value

Realise that your gamefield is constantly moving.Anywhere but the NoCompromise position is vulnerable.

ValueCompromise

NoCompromise

DoubleCompromise

PriceCompromise

High Price

Low Price

Low Value

High Value


ValueCompromise

NoCompromise

DoubleCompromise

PriceCompromise

High Price

Low Value

High Value

Constantly adapt your business model so you stay ahead on both Value and Price as perceived by your brand-owner.



Than were making it slightly more complex.



The playing field is moving with time.


Lets look at lessons from the fashion sector.


The department stores were the King Of Retail.Unmatched rulers of the mass-market fashion sector

DeSt


Since then new competitors have created new standards for Value and Price.

DeSt


That means that the whole game-field moves to the right.


And below.


Which adds up to a movementin the NoCompromise diretion.


Since then new competitors have created new standards for Value and Price.

DeSt


We have called it the international department store disease.

DeSt


That means the end of the silly assortments in the supermarkets of the department stores too.


This disease has claimed many victims already.Like Woolworth, Karstadt and Hertie.


Mrs. Consumer embraces the new NoCompromise.And has forgotten all about the past.


The same deadly disease is hitting other large surfaces.Like hypermarkets.


In developed countries like Germanythe hypermarket is at the end of its life-cycle.

12000 m2


I saw the same thing last night in Warsaw.

12000 m2


Huge stores, not much traffic.

12000 m2


Far too much choice, making for time-consuming shopping

12000 m2


-42%100% -15%

Silly assortment architecture


In many countries hypermarkets are at the end of their life-cycle


They cannot prevent the game field sliding beneath them.

HyM


Whereas we see these baskets in Aldi.

12000 m21000 m2


All countries travel on the same time-line.


In developed countries the way to Mrs. Consumergoes through just a few retailers.

30%

20%20%

10%

5%

5%

2%2%

2%2% 0%0%0%0%


These guys gobble up the market.That battle is going on right now in many countries.

30%

20%20%

10%

5%

5%

2%2%

2%2% 0%0%0%0%


In undeveloped countries the way to Mrs. Consumergoes through many, many mom & pop stores and street vendors.

5%

95%


The journey of retail development is always the same.Its just where you are on the time-line that makes the difference.

Modern RetailTraditional Retail


The level of development defines the relative power of producers and retailers.

Modern RetailTraditional Retail


To fight off hard discounters,German full service retailers go a bit overboard in richness of assortment.


In the upmarket Zurheide in Dsseldorfwe counted 91 SKUs of honey.


In the upmarket Zurheide we counted 91 SKUs of honey.


Or 84 SKs of honey in a regular Edeka.


Or 24 SKUs honey at a Rewe City in Kln.


In Aldi Sd we recently counted 4 SKUs of honey.


Or in Biedronka Poland only two types of honey.Not unsuccesfull idea: they open one store per day.


When you ask producers and retailersthey will tell you that less choice is less value.


But when you ask the consumer,she will tell you that a good pre-selection is fine by her.


Dont believe me: believe the consumer.Look what has happened in Germany.

eysinksmeets.com

43%

57%

Marketshare in money

65%

35%

Marketshare in units


Or what I heard last night about Danmark:50% marketshare of discounters.

eysinksmeets.com

50%50%

Marketshare in money

75%

25%

Marketshare in units


For distributors, agents an importers this is no good news.You used to have much of your relevance in the lower rotators.


Thats not alltogether good news for distributors.


Rationalising assortmentinevitably leads to rationalising the middle-men.


Unless the brand owner perceives you as NoCompromise solutionhe will limit the steps in the value chain.


The NoCompromise curve is determining products and assortment architecture too.

site map | search eysink smeets business consultants

These were the good old FMCG brands.A-brands, B-brands and C-brands.

ValueCompromise

NoCompromise

DoubleCompromise

PriceCompromise

High Price

Low Price

Low Value

High Value


This is the old-fashioned way to look at assortments.

site map | search eysink smeets business consultants

And how the private labels find their position.

ValueCompromise

NoCompromise

DoubleCompromise

PriceCompromise

High Price

Low Price

Low Value

High Value


The NoCompromise curve applies to the positioning of brands as well.

ValueCompromise

NoCompromise

DoubleCompromise

PriceCompromise

High Price

Low Price

Low Value

High Value


With the Retailers private labels in very well structured positions

ValueCompromise

NoCompromise

DoubleCompromise

PriceCompromise

High Price

Low Price

Low Value

High Value


The price-distance turns out to be always the samefrom country to country.

+0/40%

-60/70% -40/50%

ValueCompromise

NoCompromise

DoubleCompromise

PriceCompromise

High Price

Low Price

Low Value

High Value


Rationalization of the assortment architectureis a logical result.

ValueCompromise

NoCompromise

DoubleCompromise

PriceCompromise

High Price

Low Price

Low Value

High Value


This looks like the new shape of an assortment.


Thats challenging news for distributors.


Rationalising assortment leads to rationaled value-chains.Unless you have a firm NoCompromise position.

ValueCompromise

NoCompromise

DoubleCompromise

PriceCompromise

High Price

Low Price

Low Value

High Value


Two opportunities today for distributors.As the retailers find these positions are difficult to fill.


Eysink Smeets NoCompromise GameField

In your thinking, sketch out in the NoCompromise model.

http://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.com


I want to help you with a number of directions in which you can be looking.


The long-tail/short-tail model is a very relevant modelfor you distributors.


That will describe from what direction the waves of change will come.


Thinking about the long tail is important for distributors.

Number of skus

Rot

atio

n


The natural habitat for distributors is -of course- in the long tail.The short tail is done in many countries by the brands themselves.

Number of skus

Rot

atio

n

Distributors do itBrands do it


The smaller the country, the more chance there is that brands outsource their presence in the market.

Number of skus

Rot

atio

n



Number of skus

Rot

atio

n

Number of skus

Rot

atio

n


Discounters

In hard discount there was only limited potential for distributors. As they focus on the extremely short tail.


Number of skus

Rot

atio

n

Number of skus

Rot

atio

n


Discounters

The hard discounters are stretching their assortment a bit recently. That offers a bit more potential for distributors.


Number of skus

Rot

atio

n

Number of skus

Rot

atio

n


Hypermarkets

The hypermarkets seemed ideal for distributors.Endless assortments, but as we know rotation can be very bad.


Number of skus

Rot

atio

n

Number of skus

Rot

atio

n


Supermarkets

The hypermarkets are in trouble everywhere.The shift towards supermarkets reduces distributor-potential.


Number of skus

Rot

atio

n

Number of skus

Rot

atio

n


Supermarkets

The supermarkets allow some low-rotatorsto give spice and added-value to their assortments.


Number of skus

Rot

atio

n

Number of skus

Rot

atio

n


Supermarkets

Unluckily retailers punish succes for distributors.If rotation increases, they will consider to by-pass the distributor.

site map | search eysink smeetseysink smeetsHome

I went to Krakow Railway Sation this morning.

keynote:/Users/hanseysinksmeets/Documents/787Dubai%20End%20of%202010/Keynotes/eys_dubai_travel_splits_110610.key?id=BGSlide-617keynote:/Users/hanseysinksmeets/Documents/787Dubai%20End%20of%202010/Keynotes/eys_dubai_travel_splits_110610.key?id=BGSlide-617


You see the normal coffe-o-the-go behavior.



Not as much food and drinks in their hands.like you would see in stations in London, Berlin, Amsterdam.



But also in Krakow you cannot escape the international trend of people eating on the go.



It was 7 in the morning.



And the place was packed with breakfasting people.



Also interesting at the Station this morningwas the presence of hard discounter Biedronka.



With many people using this Biedronka as a convenience store.



I passed this schoolclass around the corner from the hotel.How many will still cook at home in 10 years time?



Number of skus

Rot

atio

n

Number of skus

Rot

atio

n


Discounters

As we have seen, in hard discounters like Biedronka it is a big challenge to find opportunities for distributors.


Number of skus

Rot

atio

n

Number of skus

Rot

atio

n


On-the-go

Fast food and other on-the-go concepts are even more limited.But you have to search for opportunities in these formats.


The rapidly expanding proximity stores dont have much of a long tail.It needs new thinking to put products in there for a distributor.



Number of skus

Rot

atio

n

Number of skus

Rot

atio

n


Supermarkets

This was as we saw the supermarkets.


Number of skus

Rot

atio

n

Number of skus

Rot

atio

n


Minimarket country

This is what remains of the assortment in a proximity store.Which of your products will fit there?


Think if you fit the needs that exist there.




Number of skus

Rot

at

ion

DistributorsNo distributors

Minimarket

Then plan your ideas into the NoCompromise model.

http://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.com


Than were making it even more complex.


The game field changes position much more rapidly today.


Iis called the Information Retail Revolution.


We need a new version of the NoCompromise Game.


New players force their way into the game.Fast and powerfull.


They are the children of the Information Revolution.


They are accelerating the NoCompromise changes.


Information Retailers are here!


They cause the Information Retail Revolution.


You must prepare itself for much more players on the GameField



The supermarkets and hard discounters already eroded some trusted retail formats.

nocompromise-model

SuperMarkt

HyperMarkt

Discount

http://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.com



They made the GameField slide this way.

nocompromise-model

SuperMarkt

HyperMarkt

Discount




Business models of companies are becoming obsolete.But business models of formats too.

nocompromise-model

SuperMarkt

Discount

ToGo

C2C

FoodService

Meal boxes

Online SM

HyperMarkt

Nonfood Discount

http://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.com



Business models are eroding.But also sector models.

nocompromise-model

SuperMarkt

Discount

ToGo

C2C

FoodService

Meal boxes

Online SM

HyperMarkt

Nonfood Discount

http://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.com



The NoCompromise battle on the formatsis not at its end, but at the beginning.

nocompromise-model

SuperMarkt

Discount

ToGo

C2C

FoodService

Meal boxes

Online SM

HyperMarkt

Amazon

Nonfood Discount




Now, distributors and the internet.



Number of skus

Rot

atio

n

Number of skus

Rot

atio

n


Supermarkets

Theoretically the internet would be the ultimate distributor-heaven.


Number of skus

Rot

atio

n

Number of skus

Rot

atio

n


Supermarkets

The story is that with e-retail allows great business on the long tail.Ideal for smaller brands. Ideal for distributors.


Number of skus

Rot

atio

n

Number of skus

Rot

atio

n


Supermarkets

So far that does not work. Postage-stamp-size products on website dont create a new need.

?


Does anybody know what product this is?

?


Does looking closer to the product help?

?


Does the name help?

?


In fact it is scottish blood sausage.


Yes, people google for childrens cough medicine.


But how many people here have ever googled blood sausage?


How much marketing money can you spend Krakowto create even a small demand for Black Pudding?

Try Black Pudding now!


Like here at the Krakow Railway Station.

Try Black Pudding

now!


How fast will all of Krakow eat Black Pudding?

Try Black

Pudding now!


Number of skus

Rot

atio

nR

otat

ion


Supermarkets

So, concluding: the promised good times of the internet for the long tail do seem not appear in food yet.


Number of skus

Rot

atio

nR

otat

ion


Supermarkets

On the contrary.It does not bring rotation for the long tail.


Number of skus

Rot

atio

n

Number of skus

Rot

atio

n


Supermarkets

Meal boxes like HelloFresh or Middagsfrid are growing rapidly.They concentrate on a very, very short tail.


Fresh meal boxes like Middagsfrid in Sweden delivers menu-based, portioned fresh food.


Not very much an environment for distributors.


New chances for distributors.


How can you as a distributor create a function in todays NoCompromise Retail Revolution?


Redefine what you are.


Just a number of directions to start thinking.


Distributor.Outsource partner.


Distributor.Logistic partner.


Distributor.iRetail facilitator.


Distributor.Own brand partner.


Distributor.European entry partner.


Lets say Im an Australian brand, and I look at Europe.


That gives me a headache.


I would love to find or two respected and experienced companiesto fix the whole of Europe for me.


Can I get the Champion League of European distributors around the table with one phone-call?


Or is finding the right distributor for a producer more complicated than googling Europes largest retailers myself?


I would suggest to a producer to start with the retailer,and design the value chain backward; delivery, warehousing, etc.


Distributor.Brand.


Best example: Zeta, importer of Italian products became the Swedish brand for the Italian Life.


Zeta, a third generation immigrant Italian family



Zeta is in every category




You need to be athletic and agile for the time of the IRR.



Just putting on a new suit will not help.


Downplaying the new players will not help you either.


You will just be looking on,and see others sprint away.


Who are you going to be?Suboptimzing todays situation?

A? B?


Or athletic and agile? Fit for the IRR?

A? B?


When paradigm shifts hit hard, restart with a white sheet of paper.



nocompromise-model

When the paradigm shift hitsyou need to start with a clean sheet of paper

http://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.com



What are we selling anyway?




nocompromise-model

Products? Distribution? Marketing?Network?

Sales?Local knowledge?

Category management?

http://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.com



nocompromise-model

Who is our primary client?The retailers in our country?

Our brand-owners?

http://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.com



nocompromise-model

How much time do we have to re-invent our business-model?

Really?

http://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.com



nocompromise-model

What is our business modelin 10 years time?

http://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.com



nocompromise-model

And in 5 years time?

http://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.com



nocompromise-model

And in 3 years time?

http://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.comhttp://www.eysinksmeets.com

ValueCompromise

NoCompromise

DoubleCompromise

PriceCompromise

High Price

Low Price

Low Value

High Value


ValueCompromise

NoCompromise

DoubleCompromise

PriceCompromise

High Price

Low Price

Low Value

High Value

Take care that you are perceived by your brand-ownerin the NoCompromise corner.

ValueCompromise

NoCompromise

DoubleCompromise

PriceCompromise

High Price

Low Price

Low Value

High Value


ValueCompromise

NoCompromise

DoubleCompromise

PriceCompromise

High Price

Low Value

High Value

Realise that your gamefield is constantly moving.Anywhere but the NoCompromise position is vulnerable.

ValueCompromise

NoCompromise

DoubleCompromise

PriceCompromise

High Price

Low Price

Low Value

High Value


ValueCompromise

NoCompromise

DoubleCompromise

PriceCompromise

High Price

Low Value

High Value

Constantly adapt your business model so you stay ahead on both Value and Price as perceived by your brand-owner.


More questions?

[email protected]+31654286303

mailto:[email protected]:[email protected]://www.eysinksmeets.comhttp://www.eysinksmeets.com


World wide retail business consultants

www.eysinksmeets.com / eysink smeets business consultants bv / 2006 / singel 26 / 1015 AA amsterdam / the netherlands / phone +31 20 6265573