Grant Leach, managing director of Crossmark NZ, said that typically around one in 10 New of companies outsource their sales and merchandising activities, but that ratio is now changing.
He believes that the current increase in popularity of this approach is the result of three factors: New Zealand’s geography making a sales team very expensive to service; increasing cost pressure on manufacturers, which they cannot necessarily pass on to retailers; and growing margin pressures on manufacturers from retailers.
“In the past 12 or 18 months [we] have noticed a change in the type and size of manufacturers that are seriously considering the possibility of using a sales and merchandising agency,” Leach said.
Whereas manufacturers with a turnover of around the NZ$25m (US$18.4m) mark would previously move in this direction, much larger companies including those selling up to NZ$60m worth of products are now considering outsourcing their marketing.
“And I would predict that in the next 12-18 months it’ll be substantially higher than that threshold point.”
Leach added that specialist sales and merchandise services are “where the future is going from a sales and merchandising agency perspective”.