Can brokers reinvent themselves?
Through a special arrangement, presented here for discussion is a summary of a current article from Frozen & Refrigerated Buyer magazine.
Consolidation, centralized buying and technology have forced brokers (or sales and marketing agencies, if you prefer) to adapt repeatedly. New challenges include static sales, online ordering and pay-for-service restructuring.
According to broker veteran Don Stuart, former COO of Kantar Retail and now managing partner at Cadent Consulting Group, consolidation on the retailer front has brought less of a need for local contacts — a traditional profit center for brokers — due to centralized buying points. More manufacturers have integrated additional headquarters accounts under their direct responsibility.
In the past few years, brokers have also become "more than just in-store execution arms," said Stuart, who began his marketing career (at Pillsbury) in both frozen and refrigerated business units — traditionally strongholds for brokers. They are now expected to provide new, full-service shopper marketing and insight capabilities.
He explained, "The concept is account-customized and sometimes store-customized execution based upon shopper insights. This is part of the ‘supermarket offer’ by brokers, and retailers need to get the best insight whether it’s from a broker, a manufacturer or other third party when it comes to driving total category sales and profitability."
Regular planning sessions by buyer group with the key brokers in advance of actually doing the work has proven to be particularly beneficial to both vendors and retailers.
Retailers need to treat brokers as "more than just the source of in-store labor, but rather as a true partner," he said. Aligning responsibilities, providing flexibility to meet objectives and avoiding conflicting demands from headquarters and the store-level retail are critical.
Mr. Stuart added, "Leveraging brokers at what they do best, in-store service, in a true partnership fashion can result in a win/win."
Over many years, however, broker compensation has shifted to a more pay-for-service model, due to both cost pressures on the manufacturer side along with a desire for enhanced retailer service. Added Mr. Stuart, "Unless brokers can truly measure the impact they are having on sales, the trend will be down."
Moreover, with projections of more modest or even static growth at brick & mortar, brokers will be increasingly challenged to add value to online commerce.
Said Mr. Stuart, "The question is: How can brokers continue to credibly expand their service offering to grow revenue in a static environment or better define the area in which they play with new products, new retail environments and new services?"
What do you think is the biggest challenge brokers face in the years ahead? How will their roles change?