Retail’s ‘blue ocean’ future

I am paddling across the Bass Strait for the next three weeks, so thought it appropriate to talk about what I’ll be looking at for some weeks to come – blue ocean!

Putting your product out to “blue ocean” is a retail marketing term that we’re going to put into a great deal of use in the coming year and beyond. But what does it mean? And what does the blue ocean offer for manufacturers and brands?

“Blue ocean strategy”, in retail marketing describes how marketers position an existing product or brand in front of a new shopper in a new retail channel.

We’ve seen this strategy come alive over Christmas and New Year in Australian retail, but there’s more to come. Mark my words.

It isn’t possible to keep growing as a retailer or a manufacturer unless you take every opportunity to put your product in front of new shoppers in new stores, or offer your loyal shoppers new products in your own stores. It is at times a very symbiotic relationship, as both retailers and manufactures work together to open up new trading relationships.

The “blue ocean” that I have talked about already during the course of this year has been hardware store environments for confectionary and snack items, mass department stores for mainstream grocery items and, in the US, drug stores for wine and beer stock.

Each of these steps in opening up “blue ocean” in retail is a function of both the retailers and the manufacturers looking at shoppers – not consumers or customers – in each individual store type and making the call on whether a given product is relevant to this group of shoppers.

The funny thing about us as shoppers is that we aren’t surprised or shocked by new “stuff” appearing in our local and most frequently visited stores. We tend to accept that if it makes our life easier by saving us time, we’ll just change our shopping habit and purchase then and there, rather than travelling to the store we normally visit to shop these items.

The fastest shifts in Australia have arguably been between the grocery stores and pharmacy stores, with “health and wellbeing” products appearing at a growing rate in grocery stores, and food, drink and household items appearing in pharmacy stores.

And remember, this is against the backdrop of yet more rules when it comes to retailing in Australia. In the case of grocery and pharmacy, both retail zoning laws and pharmacy laws outline exactly what we can and can’t buy, where and at what times. This matters in the same way that liquor licensing laws matter to us as shoppers, as the laws impinge on our ability to buy what we want where we want and that costs us time. Retailers work hard to interpret the laws and then find ways around, without breaking them, in order them to improve service for their shoppers.

While I don’t predict it will happen fast, these rules will be challenged and gradually changed in the next two or three years.

In the same way as we have begun to see Woolworths and Coles construct walk-throughs between their grocery and their adjoining liquor sites, we can expect to see pharmacy adjacent to supermarkets with walk-throughs between.

In the discount department store environment, Big W, Target and Kmart in Australia, we will see food, specifically meal replacement, begin to appear. These are big format stores that people frequent during lunch time and between work and home of an evening. In the US, smaller ranges of staple food items traditionally only found in grocery stores are already being trialed by US Target.

Personally I do struggle with the amount of zoning laws we need to think our way around in Australia. Ironically they are more of a barrier to competition with new players and organic growth from existing player than any claimed duopolies. If the zoning was easier, ALDI would’ve had 300 stores in a decade, not 200, and another international retailer would’ve been in Oz operating in out of town green field sites a decade ago too. This isn’t a federal competition issue, it’s a state planning issue.

Still, not having a blank canvas does make us as business people think harder about where the blue ocean is – and how to travel it.

In his role as CEO of CROSSMARK, Kevin Moore looks at the world of retailing from grocery to pharmacy, bottle shops to car dealers, corner store to department stores. In this insightful blog, Kevin covers retail news, ideas, companies and emerging opportunities in Australia, NZ, the US and Europe. His international career in sales and marketing has seen him responsible for business in over 40 countries, which has earned him grey hair and a wealth of expertise in international retailers and brands. CROSSMARK Asia Pacific is Australasia’s largest provider of retail marketing services, consulting to and servicing some of Australasia’s biggest retailers and manufacturers.