An increasing number of manufacturers are looking to use direct sales with their customers. The benefits are manifold: data enrichment and qualification, community loyalty... These are all advantages that enhance the value of their brands and have an impact on commercial negotiations with retail chains.
Direct sales are on the rise among manufacturers. An increasing number of them are not only selling through retail chains, which have been their traditional partners, but also directly to their own customers. According to NielsenIQ, in 2021, sales of mass-market products (FMCG) and self-service fresh produce (SFF) fell by 2% in volume. The decline in the drugstore-perfumery-hygiene (DPH) categories was even greater, at - 2.9%. Shop traffic is eroding and direct sales, or direct to consumer (DtoC), are contributing to this.
Interacting with your community
However, the process of selling directly is neither natural nor easy, regardless of the channels used: shops, e-commerce site, pop-up store. Manufacturers are taking inspiration from brands that have succeeded in meeting this challenge, particularly digital native vertical brands (DNVBs). Among the greatest successes in France, we can cite, for example, Le Slip Français, Sézane, or La Crème Libre... This success can be explained by a very clear brand positioning, continuous interactions on the web and mobile with their communities and an outstanding customer service.
It must be said that DtoC is becoming vital in order to continually take the pulse of consumers whose behaviour is changing very rapidly. Thanks to the feedback and recommendations of its community of customers, from which the beta testers come, the manufacturer can develop its products as closely as possible to their needs: research and innovation thus gain in efficiency and speed.
Enhancing the brand
Bonduelle and L'Oréal are among the pioneers. In 2011, the vegetable specialist opened a shop in Villeneuve-d'Ascq with its "Bonduelle Bienvenue" drive. At L'Oréal, DtoC is one of the pillars of the brand's strategy, particularly within the luxury division. Lancôme customers, for example, buy on the e-commerce site: they are identified and sent personalised offers inviting them to consult the beauty advisors in the department stores. A net promoter score (NPS) has been set up for all distribution channels to improve brand awareness with one objective: to develop customer loyalty. A loyal buyer consumes 20% to 30% more than another! L'Oréal Paris products, from the consumer division, are sold in supermarkets, but also on Amazon and on the brand's e-commerce site. Ferrero, which produces Nutella and Kinder products, among others, will soon open an e-commerce site in Italy.
Regarding specialised channels, let us quote the recent example of Royal Canin. In the very promising market for dog and cat food and accessories (+9% in 2021), the company is currently testing two shops in Paris, including "L'atelier félin". Its aim is to make up for the lack of specialised shops in large urban areas. In concrete terms, it offers a personalised recommendation, made by an expert salesperson or, if the customer so wishes, via a digital application, which corresponds perfectly to the needs of their four-legged friend. The famous customer experience is here.
A position of strength
Thanks to this customer love, these manufacturers are able to promote their brands much better than a retailer does with its private labels. The latter are doing poorly, as shown by their 2.6% drop in turnover over the past year.
This gives manufacturers a leading position in trade negotiations with retailers. They offer more innovative products, trendy brands and strong brand awareness. The chains, which are thus forced to offer, on their shelves, the products of these industrial brands that have become even more unavoidable, are subject to a price war and promotional pressure between them. To the detriment of their private labels. At the same time, the manufacturers benefit from the unrivalled digital holdings of the shops in these same mass distribution networks at a lower cost. Direct sales have the effect of weakening the distributors, not by eating into their turnover, but by cutting into their commercial margins.
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