Clarkston Consulting
Skip to content

Will Channel Conflict Limit Your Growth?

Strolling the aisles of Natural Products Expo East today, I asked several vendors where I can find their products. The conversation naturally led to discussion about natural channels versus mass channels; the operative word being “versus.” Does it have to be “versus”? Can’t it be “both”? Of course it can, but it seems to be a delicate tightrope to walk when choosing growth through mass channel distribution.

Mass Channel

By mass channel, I am generically referring to:

  • Grocery (“mainstream”, not natural grocers)
  • Mass merchandiser (yikes: Wal-Mart!)
  • Mass drug (Walgreens, CVS…)

With three different vendors I shared examples of natural “born green” brands that have enjoyed wild success in mass channels. While the vendors all shared common loyalties to their base of natural channel consumers, they had a glisten in their eye when envisioning the growth opportunities associated with mass. But the glisten seemed to quickly fade when we started talking about the challenges of selling to mass and the supply chain pressures of serving mass channel requirements.

I shared the same examples with three different retailers, and they very subtlely and politely turned their noses up at those brands that had “sold out” to mass channels. On one hand, they were emitting a very emotional response to seeing a beloved brand go to the “dark side”; on the other hand, they professed a legitimate concern that they could not compete with the volume and distribution of the mass channel so no longer wanted to carry the products. In one case, it seemed that the retailer felt jilted by the brand, having lost contact and personal attention from the brand’s sales team, presumably distracted by the spoils of selling through the mass channel.

What’s wrong with this picture? Is the cultural divide between the healthy natural channel and traditional mass channels so deep that brands cannot thrive in providing a growing consumer base of LOHAS (and LOHAS wannabe) shoppers? Luckily, the divide seems to be dwindling as more and more consumers demand natural alternatives and have grown skeptical of traditional brands’ efforts to introduce healthy solutions. But what can vendors and natural retailers do to address this channel conflict such that both enjoy growth and prosperity while providing greater populations with healthy and environmentally friendly solutions? Here are some ideas and examples:

  1. Segregate product lines and/or packaging so that each channel has unique offerings. EXAMPLE: When Coke acquired Honest Tea, the all-natural brewer gained overnight access to Coke’s DSD distribution model. But it focused its PET line on DSD and reserved glass for natural channels. Besides the environmental implications of glass v. PET, the segregation of packaging options gives Honest Tea sales reps and brokers a great story to tell natural retailers: “hey, you guys got us our start and we are reserving the glass line for you; let those mass guys have PET and you will still have a differentiated product.”
  2. Develop product and promotion exclusives. Careful with this one, it can get expensive and hard to manage, especially when exclusivity includes exclusive labeling. Avoid custom labeling where you can, but offer exclusive launches and line extensions between the channels. If nothing else, it makes the channel and specific retailers feel special and honored to get exclusive distribution.
  3. Develop brand stories that speak to each channel differently. For mass channels, leverage the story that they NEED natural alternatives to draw consumers to particular categories and spend on higher margin items. LOHAS consumers will seek natural brands and are more likely to visit the store (or the natural aisle) if natural brands are introduced within the categories. For the natural channel, engage them in the brand story of “natural transition and transformation.” As consumers start to see natural brands in mass channels, they are more likely to pursue natural solutions in more categories, thus driving traffic back to the natural channel where variety and category breadth prevails.