Inside This Issue - News
Best practices eyed
November 29th, 2010
WASHINGTON – Category-leading suppliers managed above average sales gains in 2009 while spending less than average on their sales operations.
That is one of the findings of a report on winning customer and channel management practices released earlier this month by the Grocery Manufacturers Association (GMA), McKinsey & Co. and Nielsen Co.
Net sales for companies identified as “sales strategy winners” grew by almost 3 percentage points more than the average growth for their category, and they invested 8% less than the category average to achieve that growth, the survey found.
The report summarizes the findings of the 2010 Customer and Channel Management Survey. The survey, which has been conducted since 1978, this year focused on four key issues: sales strategy, pricing and trade investment, customer collaboration, and complexity management.
"In terms of sales strategy, top-performing companies realized growth faster than their category peers by investing in their go-to-market models, aligning resources with high-growth channels, and upgrading sales leadership teams and strategic collaboration," says Kris Licht, a partner in McKinsey’s consumer/packaged goods practice. "Looking ahead, more than half of winning companies said they will look to solidify gains by boosting field sales and merchandising resources."
Complexity management is another issue addressed in the study. Manufacturers’ efforts to meet retailers’ varying price-point, size and packaging requirements have resulted in large product portfolios that require careful management.
"It is no surprise that 96% of survey respondents acknowledge the challenges posed by vast SKU assortments and overall complexity in the marketplace," says Stuart Taylor, vice president of custom analytics for Nielsen. "There is known concentration at the top, with 25% of SKUs generating 80% of consumer packaged good sales, but the remaining 20% is not insignificant.
"The top performers are addressing these challenges by being disciplined about conducting their own SKU optimization exercises on a regular basis. And, while there are no firm rules, we find the top performers also limit the number of retailer-specific SKUs they produce to less than 10% of total SKUs."