Kantar Worldpanel - www.kantarworldpanel.com

LatAms' favorite channel faces new challenges

05/12/2016

Today, more than 62 million households across Latin America buy from door-to-door sales reps. That is, however, the lowest level in the past three years. The channel had previously reached a further two million households, mostly in Brazil and Argentina, with personal care and beauty products.

New needs affect channel strategies

The channel has suffered the impact of multiple external forces, the most significant were the growth of convenience stores and specialisation, which has been practiced mostly by drugstores. The latter is particularly significant as it is the preferred channel for 70% of consumers in Peru and 55% in Colombia. In addition to being a “facilitator”, drugstores provide a pleasant shopping experience; give consumers the chance to test products while they shop and to use different payment methods – either cash or credit card. This is a key differentiator from door-to-door where cash is often the only accepted method of payment.

The reinvention of drugstores has not only occurred to meet the new needs of a more demanding and eager consumer, but also to gain relevance at a moment of economic slowdown and growing access to the internet. With more and more shoppers going online, there are additional the challenges of the credibility created through bloggers, opinions posted publicly on social networks, as well as tutorials by the manufacturers themselves.

Thus, drugstore have increasingly modernised, differentiating store layouts, training consultants to provide guidance to consumers at the moment of purchase and expanding product assortment to become noticed by manufacturers.
Beauty products have grown by 32% at drugstores, while essential personal care products have grown only 8%

China: a mirror for the future?

Similar shifts have already taken place in Europe. Where previously the door-to-door channel used to stand out, it has been replaced by drugstores, perfume stores and even the discounters. Today, the region is undergoing another change.

This time it is the internet that has increasingly gained relevance. The same trend has also been witnessed in China, where e-commerce accounts for more than 50% of all personal care sales – while in LatAm just 3.5% of all households do any type of purchase on the online channel.


But does that point to the end of door-to-door?

Certainly not. Yet it is clear that other channels have gained relevance because door-to-door has lagged behind in its ability to keep pace with consumer change and reinvent itself over the years.

If, like Mary Kay which has modernised and differentiated itself by offering better rewards to its “Beauty Consultants”, customised services to its consumers and an online support channel, other brands had also reinvented themselves, the development of the door-to-door channel might have been different.

In the current environment, where the channel is losing customers, Mary Kay is bucking the trend. The brand has attracted more than 1.5 million households over the past three years and expanded in excess of 80%. Brazil and Mexico are the key countries in which the brand has grown.

In addition to reinvention for the channel, door-to-door should also pay attention to:

  • Sales Reps: Even today some brands rely on sales reps as their primary route to reach consumers. As such, they must be careful about how they into enter other channels. Sales reps are key stakeholders, and may feel threatened or demotivated when consumers can access to the same brand through a channel which has the products ready to take away and is able to offer various methods of payment.
     
  • Omni-channel Consumers: It is increasingly consumers who seek out the channels to shop at and that can present new opportunities for the brand. The 64% of consumers who shop at more than two retail channels spend 48% more than shoppers who buy exclusively at one channel. In other words; the more channels, the higher the spend, the greater the opportunity.
     
  • Different channels for different categories: Once a brand has decided to enter different channels, it might also need to work out different strategies. This will help protect it from demotivating its sales reps and cannibalising categories/channels, while leveraging products that have proved difficult to expand within door-to-door. For instance, perfume, which consumers must know in order to make a selection, may focus primarily on brick-and-mortar stores – this will facilitate consumers’ contact with the product and will also increase the chance of making a gift of that category to someone.

By Cecilia Alva, Clients & New Business Director Latam; and Fernanda Frigo, Senior Account Executive LatAm

Today, more than 62 million households across Latin America buy from door-to-door sales reps.

Today, more than 62 million households across Latin America buy from door-to-door sales reps.

Get in touch

Cecilia Alva
Clients & New Business Director Latam

Follow us
Newsletter
Twitter
LinkedIn

Our website uses cookies to improve the user experience.
By continuing to use this site you agree to our use of cookies. [Cookies]