Busting the myths of retail outsourcing

BY Australian Retailers Association
07 February 2019

There’s an assumption that outsourcing comes at a cost, that the business will not be in control, that it is more expensive than deploying an in-house team, and that it is simply easier to just ‘do it ourselves’. Yet in the highly volatile retail sector, where consumer spending is influenced by many external factors outside a company’s control, the flexibility, cost efficiency, and transparency of outsourcing certain functions, such as merchandising and field marketing, can bring a wealth of benefits.

CROSSMARK’s director of client service Anthony Di Francesco, shares his five common misconceptions about outsourcing and explains how debunking these myths could be the key to surviving and thriving in the retail sector.

Myth 1: Outsourcing is more expensive

One of the most common myths is that outsourcing merchandising field staff is expensive. However, many companies fail to look beyond the agency’s costs which include indirect costs of labour such as field operations support and technology. If a financial analysis is undertaken, companies are usually pleasantly surprised at the cost savings that are gained from outsourcing, particularly for those with seasonal products as outsourcing offers scalable solutions that can be tailored around the company’s needs.

Myth 2: An agency won’t understand my business

Just as a soap manufacturer knows everything about the research, development and production of soap, a retail merchandising company has its core function specialising in retail experience that can add value across a number of levels. Companies should consider whether the business would benefit from focusing its internal resources on things like product development and outsource retail specific functions to a field marketing agency that can leverage its team of experts to help drive in store sales.

Myth 3: Agencies won’t build meaningful relationships with retailers

When it comes to retail, relationships can be crucial to getting stock ranged and on-shelves. Field merchandising teams manage multiple brands, scheduling multiple store visits and focus on fostering strong relationships with store staff at all levels from store managers to the category buyers and warehouse managers. The value in this cannot be underestimated, noting that leveraging relationships through an agency can actually be a huge selling point for outsourcing.

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Myth 4: In-house teams are more efficient

The perception that agency staff are not as hard working as an in-house team couldn’t be further from the truth. A good agency has an obligation to be transparent and will prioritise accountability and efficiency due their desire to maximise their clients’ ROI. Companies who are concerned about team accountability should check what parameters the agency places around project timelines and staff shifts.

Myth 5: Agencies don’t consider long term sales strategies

Finally, one of the most valuable ways brands can benefit from a field agency’s retail marketing expertise is by asking the agency for input when developing sales and marketing strategies. While agencies can certainly provide short-term solutions by filling staff gaps during the Christmas rush, their expertise adds great value when they are invited to work alongside clients. The greatest advantage can be through collaboration and alignment with the brand’s future retail strategy. The data analytics extracted from an agency’s field reports and in-store observations can offer data-driven insights when developing long-term sales strategies.

With retailing currently such a challenging sector, it’s critical that brands use whatever tools they can to optimise sales and (contrary to many industry myths) field marketing agencies are one of the most effective tools available. With access to world class technology, extensive experience and knowledge in retail marketing, agencies are well placed to help brands achieve peak performance in retail.

CROSSMARK is Australasia’s largest retail marketing services company, with multi-channel expertise across grocery, mass, convenience, hardware, consumer electronics, pharmacy, and specialty retail, and serving more than 200 manufacturers and brands. CROSSMARK works with retailers and manufacturers to market products and brands to consumers in the last six feet of a sale, including merchandising and point of sale, field sales teams, product sales training, consumer and staff incentive programs and product sales. Visit crossmark.com.au

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ABOUT THE AUTHOR

Australian Retailers Association

Founded in 1903, the Australian Retailers Association (ARA) is Australia’s largest retail association representing Australia’s $310 billion sector, which employs more than 1.2 million people. As the retail industry’s peak representative body, the ARA works to ensure retail success by informing, protecting, advocating, educating and saving money for its 7,500 independent and national retail members throughout Australia. For more information, visit www.retail.org.au or call 1300 368 041.

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