The economics of Big Retail - golden ticket, or troubled brew? - Joel Alderden
The Economics of Big Retail - golden ticket, or troubled brew?
Why choosing your channel strategy wisely makes all the difference.
Major retailers & FMCG chains - no matter where - are always on the hunt for innovation. The newest, freshest, first, most disruptive, the greatest thing since…
But as a founder, a brand owner, or an FMCG startup - is it always the win it seems?
Let’s unpack the real economics behind major retail contracts—and why your channel strategy could be the most important decision you make.
The Allure of National Retail
No wonder most new brand owners & FMCG startups are dazzled by the bright lights of ‘national ranging’ - 1,000 stores, the fame, fortune & notoriety that comes with holding up a gondola end, taking a coveted promo slot, or appearing on-shelf right at eye line.
Well, not to rain on anyone’s parade (seriously, it can be a huge game changer) but let's take a brief pause before shoving all of those very expensive eggs in one basket.
Table Stakes - the real cost of entry
Here's a simplified, but realistic scenario
- You sell into National Retailer A - for a contract starting price of $9.00 per unit
- Your COGS (before selling costs) are 45% - $4.05. Not bad so far.
Now here comes the kicker. Below will be some - probably not all - of your selling costs:
- Fixed Rebates
- Listing Fees
- Marketing Fund contribution
- Promo funding
- Supply Chain Fees
- Scan Data Costs........
Pretty quickly we’ve probably added somewhere around $4.20 (47%) - more than your actual COGS, to the ‘cost of selling’
Your Gross Margin - $0.77. Or 9% per unit.
At an average of 6 units per store per week (UPSPW) across 1,000 stores - there’s around $4,600 in Gross Margin.
If you’re running a very lean overhead, you might get away with 10% which comes below GM.
Flex these figures which way and that - but at best then you’re likely breaking even, all said & done. Hard work for $0.
Depending on your category however, that 6 UPSPW might just see you up for the axe come next range review.
Busting your butt to break even, and still being sliced in a quarter’s time doesn’t sound like fun to anyone of sound mind.
But what about on-shelf? Well, assuming a 33% blended retailer margin, that's an average shelf price of $7.22. You sold your hard conceived creative breakthrough for $9 starting, made 9%, and now it's selling for way less on-shelf and making the retailer roughly 4x more than you.
A Better Play
Let’s consider an alternative. One which leans on the 'less is more' theory.
- Fewer units
- Higher margin
- Healthier cashflow
- Fewer sleepless nights
Specifically, by diversifying your strategy, selling into an Independent Retailer network(s), distributors and other retail channels.
We still start at $9 and 45% COGS, but our cost of selling changes dramatically.
Instead of 47% 'cost of selling' (Retailer A), by removing things like supply chain & scan fees, reduction in marketing, promo funding & fixed rebates, Gross Margin increases from $0.77 per unit (9%), to $2.52 per unit (28%). That >3x your previous margin.
Ok, but your rate of sale will be lower - sure. But lets assume you sell 1/3rd - 2,000 units instead of 6,000 units. Your total Gross Margin is $5k, higher than the $4,600 you can generate by selling 3x the volume.
Moreover, less production requirement = less overhead, meaning your Net Profit / positive cashflow (the bit that counts) are much healthier.
To make that even more attractive, with lower markups / margin expectations, your product will be on shelf for much closer to the $9 you started with.
By preserving your price, you preserve your brand, your need to discount, your product lifecycle, your long term profitability.
You're far less likely to get trapped in the on-off 50% promo cycle doom-loop that quickly washes away brand equity and sees consumers just waiting for the next sale to buy.
We can extend this all the way into a full Direct to Consumer / Online model - which generates great margin %’s, but will be much harder (but not impossible) to scale at speed.
It’s not all binary choices though.
Best of both worlds? A hybrid option
By splitting your volume dependency, with major retail selling 4,000 units, supplemented by 'adjacent' retail avenues generating another 2,000 - the same starting volume could see your Gross Margin at $1.50 per unit - and your overall Gross Margin $ increase by around 95% vs a single 'Big Retail' focus.
And your shelf price? Much more sustainable at $8.33 - and much less likely running a race to the bottom.
Now you have solid volume, stronger margin, and a diversified distribution base.
That extra margin is now yours to invest in your brand, upgrade your packaging, make some smart hires to grow new markets, or flow into retained earnings.
It also goes a long way to covering the support costs for a multi-channel, multi-point approach. Ensuring you've secured the right distribution channels, inventory planning, replenishment strategy and the like. Even finding the right support for retail buyer discussions - so you don't leave margin on the table.
Now you've a complimentary, controllable, diversified and higher margin way to feed the flywheel.
The Final Take: Strategy v Scale
Your channel strategy should reflect more than volume goals. It should reflect the kind of business you want to run—and it's lifecycle stage.
'Big' retail distribution is a fantastic anchor. It builds scale, volume, recognition, efficiencies etc. But that comes with a price - that you must first realise, but importantly - leverage.
Remember as well that a channel strategy is a living thing - there's no set & forget. Find the help- and spend the time making sure your strategy is still fit for purpose - and delivering. Changing too often won't give you a clean understanding of impact - but you should be incorporating your channel spend into detailed monthly P&L reviews.
Clear, consistent formats and KPI's make this efficient - and actionable.
I've spent 20+ years building financial frameworks and strategies - driving profitable scale & growth for consumer product businesses of all sizes.
If you’re navigating these choices and want an experienced perspective:
- Follow me for more content like this: Joel Alderden, CPA
- Get in touch if you’d like to learn more about how I can help your company grow profitably and sustainably:
joel.alderden@sc3sixty.au
Internal Reporting vs. Retailer-Facing Reporting: What to Prioritise You might be proud of your internal metrics—but retailers only care about the numbers that affect their shelves. In FMCG, it’s easy to obsess over internal KPIs—costs, margin, forecast accuracy. But the fastest way to damage your relationship with Coles or Woolworths? Poor visibility, slow updates, or misaligned data on their end. Retailers expect proactive, clean, timely reporting. If you’re not making their job easier, someone else will. Here’s how to balance both sides: Start with the end user —retailers. Align your reports with their expectations: stock flow clarity, DIFOT tracking, promotion summaries. Automate internal-first views of the same data (e.g. weeks cover, margin erosion, forecast misses) using tools like Power BI or Excel dashboards. Bridge with a single source of truth —your internal reports should feed your retailer-facing ones, not conflict with them. Review timing and cadence . Weekly summaries for retailers are not optional anymore. Neither is the ability to drill down. Prioritising outward-facing reporting sharpens your reputation and feeds internal clarity. Are your reports doing double duty—serving your business and your customers? Or are they slowing you down? Let us know how you’re navigating this challenge in the comments. About us : At sc3sixty, we specialise in helping FMCG brands grow with confidence through end-to-end Fractional Services tailored to the Australian and New Zealand retail environment. Our flexible support spans everything from Vendor Replenishment Planner (VRP) and Integrated Supply Planner (ISP) solutions to full Fractional Supply Chain Management and Fractional Data & Reporting Support. By embedding directly into your team, we transform complexity into clarity—improving forecasting, streamlining reporting, and unlocking performance from warehouse to shelf.
Why Poor Communication Kills Supermarket DIFOT Late trucks. Shorted deliveries. Angry buyers. Most of it stems from one root cause: communication failure—not operational failure. DIFOT ( Delivery In Full On Time ) is the supermarket scorecard that keeps sales teams awake at night. But behind every missed DIFOT target is usually a misstep in communication. Whether it’s a late forecast change, an unclear promotion brief, or silence between supplier and 3PL—communication gaps compound fast and hit the shelf harder than you think. Try using the following framework to strengthen cross-functional visibility: Clarify what’s needed: Don't assume Ops or Logistics knows promo intent—brief it. Align with internal teams early: Bring planners and 3PLs in before final orders drop. Share exception risk: Missed MOQ? Strike risk? Don’t hide it—flag early. Track feedback loops: Build post-mortem reviews into your cycle and act on the learnings. Poor DIFOT isn’t just a supply chain issue—it’s a leadership communication issue. If DIFOT is falling apart in your business, start by auditing the conversations, not just the data. What part of your supply chain communication needs tightening most? About us : At sc3sixty, we specialise in helping FMCG brands grow with confidence through end-to-end Fractional Services tailored to the Australian and New Zealand retail environment. Our flexible support spans everything from Vendor Replenishment Planner (VRP) and Integrated Supply Planner (ISP) solutions to full Fractional Supply Chain Management and Fractional Data & Reporting Support. By embedding directly into your team, we transform complexity into clarity—improving forecasting, streamlining reporting, and unlocking performance from warehouse to shelf.
Fixing Information Flow from Factory to Shelf Your product might be great—so why isn’t it always on shelf? The answer often lies in broken information flow From production to point-of-sale, FMCG success hinges on how clearly and quickly information moves. When data is siloed across departments or partners, delays happen, costs rise, and customers walk away. What’s needed isn’t more data—it’s better data movement. To fix your flow from factory to shelf, focus on these three levers: ✅ Visibility – Ensure all parties (factory, warehouse, retail, finance) are working from the same, real-time data. This might mean rethinking your reporting tools or centralising your data access. ✅ Velocity – Reduce lag between events and decisions. If a sales spike happens Monday, can your factory respond by Tuesday? ✅ Value Translation – Align insights to outcomes. Forecasts should link directly to orders. Supply gaps should trigger replenishment logic, not just meetings. This doesn’t require a full system overhaul. It starts with mapping where the gaps are and building processes that close them—fast. Where are the blockages in your information flow costing you the most? Drop a comment or message—we’ve helped plenty of brands solve this, and we’re happy to share ideas. About us : At sc3sixty, we specialise in helping FMCG brands grow with confidence through end-to-end Fractional Services tailored to the Australian and New Zealand retail environment. Our flexible support spans everything from Vendor Replenishment Planner (VRP) and Integrated Supply Planner (ISP) solutions to full Fractional Supply Chain Management and Fractional Data & Reporting Support. By embedding directly into your team, we transform complexity into clarity—improving forecasting, streamlining reporting, and unlocking performance from warehouse to shelf.
The Link Between Data Clarity and Better Customer Service in Retail Customer complaints aren't always about the product—they’re often about the process. And more often than not, the root cause is data chaos, not bad service. In today’s FMCG landscape, operations teams are expected to act fast, resolve accurately, and pre-empt issues before they arise. But without clean, consistent data on inventory, orders, or shelf status, even the best teams are left guessing. Data clarity isn’t just for analysts—it’s the frontline fuel for great customer experiences. If you're scaling or selling into major retailers, here’s how to connect data to service: Align Metrics Across Teams : Sales, supply chain, and service need to use the same data points—like DIFOT, fill rate, or stock-on-hand—from one source of truth. Make Data Accessible, Not Just Accurate : It’s not enough to have dashboards. Service teams need simplified snapshots: “Where’s the stock?”, “Has the order moved?”, “What’s the ETA?” Use Data to Be Proactive, Not Just Reactive : Look for patterns—late delivery, out-of-stocks, invoice mismatches—and trace them back to your process, not the customer. Is your data helping or hindering your operations? What one change could make the biggest difference today? Drop your thoughts or message us—we’d love to hear what’s working (or not) for you. About us : At sc3sixty, we specialise in helping FMCG brands grow with confidence through end-to-end Fractional Services tailored to the Australian and New Zealand retail environment. Our flexible support spans everything from Vendor Replenishment Planner (VRP) and Integrated Supply Planner (ISP) solutions to full Fractional Supply Chain Management and Fractional Data & Reporting Support. By embedding directly into your team, we transform complexity into clarity—improving forecasting, streamlining reporting, and unlocking performance from warehouse to shelf.
Building a Data Strategy for FMCG That Actually Helps Sales Is your data strategy just reporting the past—or actively shaping your next win at Coles or Woolies? Too many FMCG teams are drowning in dashboards but still guessing when it comes to what will drive the next sale. A data strategy shouldn’t just track what’s happened—it should empower account teams to act faster, respond smarter, and sell more. The difference between high-performing suppliers and the rest often lies in how data is used on the ground with retailers. A smart FMCG data strategy needs to move beyond static reports and into daily decisions. Try this: Simplify what matters : Don’t overload sales teams—focus on the 3–5 metrics that truly move volume or prevent loss (e.g. store-level gaps, promo execution). Activate insights : Integrate reporting into account team rhythms—weekly retailer meetings, promo reviews, and mid-cycle checks. Link sales with supply : Ensure planners and NAMs see the same truths, not competing dashboards. What’s one metric your team tracks that rarely translates into action? Or better yet—what data insight helped you win shelf space this year? Share below 👇 About us : At sc3sixty, we specialise in helping FMCG brands grow with confidence through end-to-end Fractional Services tailored to the Australian and New Zealand retail environment. Our flexible support spans everything from Vendor Replenishment Planner (VRP) and Integrated Supply Planner (ISP) solutions to full Fractional Supply Chain Management and Fractional Data & Reporting Support. By embedding directly into your team, we transform complexity into clarity—improving forecasting, streamlining reporting, and unlocking performance from warehouse to shelf.
Becoming a Best-in-Class FMCG Supplier in 2025 Retailers like Coles, Woolworths, and the Independents have raised the bar—and in 2025, only the most capable, responsive, and insight-driven suppliers are keeping up. 💡 It’s not enough to turn up with product. Retail teams want partners who solve problems, bring data to the table, and align to their end-to-end goals. So, what does best-in-class really look like in the Australian FMCG landscape today? 🛠️ It Starts with Process, Not Just Product 1. Embed Planning Discipline Early From forecast inputs to promo lead times, top suppliers have airtight internal processes. They’re not caught off guard by range reviews, they proactively flag risks, and they work backwards from retailer expectations—not internal comfort zones. 2. Automate Retail Reporting and Insights Retailers are pressed for time and drowning in data. Best-in-class suppliers make insights easy to digest—think availability heatmaps, store-level trends, and waste summaries that drive action. You can’t lead the conversation if you’re still emailing spreadsheets. 3. Be First, Not Fast Coles and Woolworths want to see suppliers who anticipate issues before they hit the store floor. That means fast feedback loops, direct communication with buyers, and clear processes to escalate service risks or supply constraints—before they become problems. 4. Build Teams That Think Beyond Their Function Supply teams need to understand trade calendars. Sales teams need to understand DIFOT. Retail engagement is cross-functional now, and the best suppliers are breaking silos to deliver results. Retailer expectations are evolving—are your internal systems and people evolving with them? If you're unsure whether your reporting, planning, or retailer engagement is truly best-in-class, it might be time to take a step back and rethink how you're supporting your key accounts. 💬 Let’s connect if your team is ready to upgrade how you work with retail. About us: At sc3sixty, we specialise in helping FMCG brands grow with confidence through end-to-end Fractional Services tailored to the Australian and New Zealand retail environment. Our flexible support spans everything from Vendor Replenishment Planner (VRP) and Integrated Supply Planner (ISP) solutions to full Fractional Supply Chain Management and Fractional Data & Reporting Support. By embedding directly into your team, we transform complexity into clarity—improving forecasting, streamlining reporting, and unlocking performance from warehouse to shelf.
Data, AI & CX Tech That Will Reshape FMCG in ANZ global retail game is changing—and fast. Retailers overseas are no longer just testing tech—they’re building their businesses around it. Think AI-driven demand forecasting at Walmart, digital twins at Carrefour, and store-specific pricing models at Tesco. Australia and New Zealand may be behind the curve, but the gap is closing—fast. With Woolworths’ Everyday Market, Coles 360, and a growing investment in retail media, ANZ supermarkets are gearing up to expect more from their suppliers—more insights, more agility, and more customer-centric strategies. So, what should FMCG businesses be doing right now to stay competitive? Here are the tools and systems already reshaping the game in 2025: 🧠 AI-powered forecasting & replenishment tools Platforms like Relex, Snowflake, and o9 Solutions are helping suppliers and retailers collaborate on smarter demand planning, real-time inventory visibility, and store-specific replenishment. Even Excel-based models are evolving with Copilot and ChatGPT plugins, reducing time spent on manual forecasting. 📈 Dynamic dashboards & self-serve reporting Power BI, Looker, and Tableau are now standard for turning raw data into sales action. The best-performing FMCG teams are embedding these tools into weekly workflows—tracking SKU trends, price elasticity, promo ROI, and store-level gaps. 🛍 Retail media + loyalty insights With Cartology (Woolworths) and Coles 360, suppliers now have access to deeper basket-level insights than ever before. Plugging this data into campaign targeting, NPD performance, and activation planning is becoming essential—not optional. 🔄 Process automation & reporting workflows Tools like Power Automate, Zapier, and Make are being used to automate sales reporting, alerting, and compliance checks. No more 10-tab spreadsheets—these systems help you scale without growing headcount. 🧑🏫 Team enablement: analytics, not just admin It’s not just about tools—it’s about people using them well. Leading businesses are upskilling their teams in data interpretation, business storytelling, and insight-driven decision making. Tools like Prysm, Coursera, and even AI copilots inside Excel are making this more accessible than ever. Where to next for ANZ FMCG? Retailers will continue to raise the bar. They'll expect suppliers to come to the table with smarter data, sharper execution, and scalable solutions. 📣 If your business could use a hand building that future—whether it’s upgrading your reporting, automating workflows, or transforming your sales and supply data into action—let’s talk. About us : At sc3sixty, we specialise in helping FMCG brands grow with confidence through end-to-end Fractional Services tailored to the Australian and New Zealand retail environment. Our flexible support spans everything from Vendor Replenishment Planner (VRP) and Integrated Supply Planner (ISP) solutions to full Fractional Supply Chain Management and Fractional Data & Reporting Support. By embedding directly into your team, we transform complexity into clarity—improving forecasting, streamlining reporting, and unlocking performance from warehouse to shelf.
‘We’ve got a great product - great potential, but if we could just…' 🚀 Unlock the potential of your Consumer Products business 🚀 The 50% of businesses that fail in their first few years are a stat we all know. But the same issues confront start and scale-ups alike. Early momentum, strong traction - rapid expansion - can be every bit as challenging. Fortunately - they can be even more rewarding too! There’s room on shelf - and in the customer's life for bold ideas, even in saturated markets. Consumers crave innovation, and competition. But here's the thing - if your route-to-market is an afterthought, that innovation can so easily go to waste. So what does this waste look like? 🚨 Cashflow - lumpy cashflow = leakage + headaches. Effective cash planning doesn’t shut down opportunities - it creates them. 🚨 Inventory - poor DIFOT, no / low safety stock - or - expensive warehousing, lost inventory, expired product. Use your working capital to water seeds, not fight flames. 🚨 Transport - low volume freight, last minute bookings, poor route planning. Better outcome - effective transport can double net margin 🚨 SKU & product performance - do better than averages - they weren’t created equal. Invest in product potential - but don’t chase expensive products into an abyss 🚨 Overheads - the $ spent fixing avoidable problems, hiring non-value roles, poor investment in trade activation. Instead - deploy variable spend for maximum impact. 🚨 And of course…no profit! Excessive COGS and compounding costs eroding strong margins into loss. Know your levers - which to pull, in which direction - and when. Capitalise on opportunity, then course correct when needed. Fundamentals require constant focus - they're a compliment to the creative process and potential of your business. Three simple lessons here: ✅ One Size Doesn’t Fit All : Your route-to-market needs to fit your business - and your customers. Don’t copy/paste what looks successful for someone else ✅ Visibility might be key - but don’t drown in ‘insights’: A small suite of key metrics and information is enough. Quality =/ quantity ✅ ROI : From your most critical materials to your most expensive management hires, every cost needs a clear return-on-investment. Be ruthlessly focused, not short sighted. Complex? Overwhelming? Expensive? Not if you find the right help. 💡sc3sixty: Your Fractional C-suite and Supply Chain Partner We've proven expertise in delivering scale, across: ⚡ Logistics Management ⚡ Supply Chain Strategy & Design ⚡ Inventory and Retailer Replenishment Planning / VRP / ISP Services ⚡ Data Analytics & Support and now, with our expansion into a full stack of Fractional COO and CFO services, we deliver comprehensive solutions at a 'fraction' of the cost of a full-time team. 🏅 Potential, fulfilled.
What’s your definition of success? No…not theirs, yours. Let’s start from there . They say the best diet is the one you stick to. Somewhat reductionist I guess, but sure. Personally I reckon it’s better to figure out why you’re putting yourself through a diet in the first place. Figure out why it’s worth sticking to, then find one that’s fits. Tip: the ones that stick are almost always motivated intrinsically. Within, not without. How someone else appears is neither a reliable source of inspiration, nor a truthful one. Much less realistic for your life. Tip 2: Seems to me the longer it takes to explain a diet to someone, the less likely it’s going to be the ‘one you stick to’…complexity is the death of inspiration. I'm not giving diet advice (unless anyone wants to pay me for it?). I am a Fractional COO & CFO who finds the analogy useful, particularly at an SME / owner & founder level. You started a business, maybe bought in, jumped on board with a powerful, if a little fuzzy desire for ‘success’. A whole organisation is now tethered to it. But can you or anyone else honestly define success? Or better, use it to make actual decisions? When I finally asked myself what professional success is (only took 20 years), it was actually really simple -helping. Actually helping companies reach their success by supplementing what they may lack - or lack bandwidth for. Analytically minded, financially ‘bent’, pragmatic, measured, deeply practical. I love to hear about your vision, but my mind goes straight to finding a route- to action, one foot in front of the other. Finding pathways is my ‘success’. The journey is the destination, as they say. The reason it’s so important? Well as it relates to me at least (it’s my post after all) is that without a genuine, intrinsic, base motivation - I can’t do my part well. Does improved cashflow, better results, a faster growing business mean the chance to open a new location? Invest? Acquire? Find the talent that’ll turn this joint into the powerhouse of its potential? Is it material motivation? (that’s ok btw). Or something more personal, more legacy. Now we know where to start. Top line or bottom, COGS, overheads, org design, margins, marketing & activation, trade spend, capital deployment. Options I’d love to help with. But wrong motivation = wrong symptom = wrong treatment. Careful though, even wrong treatment can bring some short term relief. ‘Caffeine highs’ masquerading as success, which won’t last. And to the point about complexity - things get complex real fast when no one understands success. I’m not in this for the short term. If you’ve made it this far- neither are you.
A case for - and against - outsourced expertise. Probably half the posts on successful leadership reference one basic concept. Get out of your own way. Decide the parts you - and the team around you can best play. Then, fill the gaps. Like a lot of catchy statements around leadership, startups, scaling etc- it could do with some nuance - to avoid being a trap of it's own. Your ‘gaps’ are likely to be 1 of 4 types: Short term, high priority - infrequent or non-recurring Areas you should hire for - indispensable, long term Areas you could probably cover, if it makes sense And lastly - not full time (maybe ever), but where you need maximum impact, over an extended time, for a lesser outlay. Enter the fractional. Some of the most beneficial outsourcing opportunities: Finance- bookkeeping, tax, payments, payroll. All table stakes- not to be messed with. Knowing how you make margin, why, where…and better, what to do about it- that’s how you grow. Strategy- not a synonym for expensive consultants. A simple, clear, written plan. One that serves you and keeps you honest when shiny things beckon Reporting - almost no one suffers from a lack of data now. More likely to drown in volume, or struggle to make sense of it Inventory & production Planning - effective planning is an art and a skill. One that can prevent expensive mistakes, and uncover opportunities. Supply Chain - a complexity across every facet that seems almost designed to confuse and trap even the most seasoned veterans The list goes on. The risk - in a flash you've a quasi payroll of hired help, costing $ and requiring as much bandwidth as DIY. So, a few callouts - whilst remaining firmly pro-fractional - in order to avoid death by a thousand day rates: Recommendations are gold- but not a guarantee. One size doesn't fit all. Test against your needs. Seek efficiency- leverage skills that help you solve multiple challenges in multiple areas Be clear on expectation. Don’t let scope creep become your burden Balance your load - neither a completely 'hands off' approach, nor one which monopolises your attention will serve well, long term Lastly - there are likely things you're better off doing with your existing resources. Risk, familiarisation time, complimentary skills, general interest - all factors. Be wary of help which doesn’t actively question its own relevance. One that tailors a package to fit your requirements. Not the inverse. At sc3sixty, we’ve built a fractional network to help consumer product organisations achieve their goals. We span: Fractional CFO / COO services Inventory, Supply & Replenishment Planning Cashflow Warehousing & 3PL Transport & Logistics Finance & Accounting Data led, integrated, cost-effective.
