As we race into the next 10 years it is clear to both manufacturers and retailers that our current channels and banners will continue to evolve significantly. As recently as 2005, for example, there were well over 500 retail banners in America selling groceries throughout the entire US. Today there are less than 200, and that number is projected to drop to 125 by 2025. That's a decrease of 75% in only 20 years!
Clearly, every class of retail is destined for restructuring. Whether it is grocery, mass, or supercenter that operates in an over-capacity mode, malls themselves, specialty apparel retailing, or even specialty retailing itself, over-capacity will continue to drive consolidation going forward. While it may be true that channels like Dollar and Mobile have a chance for wonderful growth in the next 10 years, the question that faces every CPG manufacturer is how to invest in the future channels... how to essentially win with the winners while avoiding investments in the losers?
When we look to the future of retail we would expect 2-4 players to dominate each channel and use economic leverage for growth. We would also expect a range of independent retailers to extend their differentiation based on continuously transforming the shopping experience. But many of the retailers we know in today's market are going to be increasingly strained to survive, all while eCommerce matures.
Taking all these facts into consideration, we have developed a service offering we call "Channel and Banner Wargaming," a creative and energizing group experience that helps manufacturers understand and gain insights into what the next 3 - 10 years will look like for the various channels and banners in the US retailing landscape.
The group experience begins by identifying most likely scenarios for the evolution of retail channels today as we know them, and then delves into a detailed, banner by banner synthesis of what we believe are the latest challenges facing each of the key banners in America.
Upon completion of that effort we break into teams and enter an exercise where we actually "wargame" the development of strategies to grow the company's business in a very highly complex and highly competitive retail environment. The outcome is a strategy deliverable which basically helps manufacturers re-think their sales team investments, their trade and promotional investments, some of their innovation investments, and most importantly, their entire cost-to-serve investments for their top, middle, and low-end retail tiers.
The ultimate objective, of course, is to create a battle plan that wins with the winners, while avoiding investments in the projected losers in the future market space.