7 November 2016

More big food and grocery companies are seeking specialist help from sales and merchandising agencies as cost and margin pressures increase, says Crossmark NZ Managing Director Grant Leach.

Speaking in an FGC Leaders Series video interview, he says that typically around 10 per cent of New Zealand companies have outsourced their sales and merchandising activities but that is changing.

He says manufacturers consider outsourcing sales and merchandising for three reasons: New Zealand’s geography makes a sales team a very expensive model to service; a manufacturer can come under increased pressure from cost of goods and can’t necessarily pass those on to the retailer; a manufacturer may also be under increased margin pressure from the retailer themselves.

“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 (SMA). Previously it was probably a manufacturer with a turnover of up to around the $25 million mark – now we’re seeing that that has changed, with manufacturers’ turnover up to about the $60 million mark.

“And I would predict that in the next 12-18 months it’ll be substantially higher than that threshold point.”

He says specialist sales and merchandise services “is where the future is going from a sales and merchandising agency perspective.”

Watch the interview with Grant Leach here.