Whether you refer to it as an “R” (recession) or an “ES” (economic slowdown), there is no doubt that it will begin playing havoc with your sales results very soon (if it hasn’t done so already). As mentioned previously in this blog, if you are a BRANDED manufacturer, you need to EXPAND our BRAND SUPPORT in the form of OPERATOR discounting, multiple buys, and price supports, or you may find yourself being replaced by the distributor’s “value brand”. The signs are everywhere, as outlined in this Sunday’s NY TIMES (link to the full article at the end of this post.)
“Spending data and interviews around the country show that middle- and working-class consumers are starting to switch from name brands to cheaper alternatives, to eat in instead of dining out and to fly at unusual hours to shave dollars off airfares…. Though seemingly small, the daily trade-offs they are making…amount to an important shift in consumer behavior.” “People are not not spending, but they are changing how they spend,” said Marshal Cohen, chief analyst at the NPD Group.”
Restaurant operators are making careful --- and not so careful --- judgments about the products they buy. “I don’t want to compromise on the quality of the items I serve,” commented Brad Roe, owner of Central City Tavern in Atlanta, “but you can be certain that I am EVALUATING alternatives to some of the base ingredients if I can save 30 to 50 cents per pound with the distributor brand. One of my branded suppliers called me last month and offered me a case rebate to continue with his product. That was enough for me to keep buying it, even though there is a slight difference in cost. I like that he is looking out for me and my business.”
Proper TPM may mean the difference between KEEPING some customers and LOSING market share that will be very difficult --- and expensive --- to get back when things improve. Your base business supports the rest of your activities. Make certain it remains on solid ground.
NY TIMES ARTICLE: (http://www.nytimes.com/2008/04/27/business/27spend.html?_r=1&scp=2&sq=michael+barbaro&st=nyt&oref=slogin)