For some time, the traditional OP industry has been bifurcating. Non-traditional suppliers are enjoying incremental volume, reasonable profitability, and a new market with new customers. Traditional main line OP suppliers, on the other hand, are finding it treacherous. Too many competitors, customer RFQ’s, and apathy among dealers add up to an increasingly challenging channel.
As Highlands was conceived in the traditional OP space, it’s painful to witness so much dysfunction. While there are some shining examples of growth and success, the entire channel is under duress. The most frustrating part is that everyone resorts to the same bag of tricks - dropping price and further lowering cost of goods. That just takes everyone down.
How did we get here? Generally, large resellers have had the most influence on category health, and many have changed their SOPs with merchandising wielding a larger influence. Couple that with a lack of product/brand differentiation and oversupply in many categories, and we find ourselves awash in mediocrity. Unless we can sell more volume to offset the lower cost, this is a zero-sum gain. Consolidation may create opportunity for the strongest to sell more into a declining market, but let’s be clear it’s a declining market especially if your product is dependent on paper. To regain footing, we must dramatically change how we do business. We have no choice.
As I see it, the only way out is a focus on upselling. If we can’t sell more units, we must make units sold more valuable. To do that, we need to alter our story and how we target the consumer. Identifying consumer needs, building a compelling value proposition against that need and then properly targeting that consumer must be at the heart of any program.
At Highlands, we work across the leadership of our largest partners to push this message - and it’s working. It’s requires us to be extremely proficient in back-end program structure because that’s where the value lies. We also help refocus product lines to illustrate the benefit of bundled solutions and efficient product assortment. We help them leverage data - theirs and the reseller’s - to show both what they’re missing. We help them to embrace online solutions, not shy away. We help grant access to field sales to create cross-selling and upselling opportunities.
It’s time to re-build profitability and influence. The programs we’re implementing are doing just that. Working the traditional market with new approaches, while encouraging the players to do things differently, will work. We’re seeing it work.