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| As retailers have consolidated and more packaged media and related devices are sold through "superstore" channels, managing retail distribution has become a critical element of success for producers of books, music, home video, video games, and consumer electronics. We are developing ways to claim the best real estate at top retail outlets through new trade pricing and vendor management skills. |
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Video distribution strategy
For a major video distributor, McKinsey consultants developed a pricing and distribution strategy. Since large retailers were demanding a direct sell option, the client needed to understand what services they would need to provide, what capabilities they would need to develop, and what price levels and structures would be required. McKinsey consultants conducted a detailed evaluation of the entire supply chain profitability and identified opportunities for the client to use distribution and pricing to increase their revenues and long-term positioning with large retailers. Profiles of analogous industries, in particular the music and book industries, led to enhanced understanding of industry dynamics. McKinsey consultants identified the key services and capabilities that would be required to successfully direct sell to large accounts and developed the pricing model and structure for direct sales. This work identified opportunities to reduce overall distribution and inventory costs and develop greater linkage with key downstream target customers, and expand into new business segments.
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Store display quality
A major U.S. publisher engaged McKinsey to audit more than 100 merchandising sites and their store display quality. We first assessed the quality of periodical display and then identified, segmented, and estimated frequency of "pocket violations." The McKinsey team designed wholesaler incentive plans and optimized merchandising routes to fix display problems. The result was that the publisher drove a 2 to 3 percent sales increase through merchandising route optimization alone.
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