While many associate the concept of disruption with the global pandemic, others have branded the pandemic as a catalyst for outstanding outcomes in an industry that had gotten a bit stuck. How was the CPG industry able to accomplish progress that would have been mapped out over the span of 4-5 years in only a matter of months? The need of the pandemic was the catalyst. This delivered a response from retailers and suppliers to ultimately work closer together than ever before as individual agendas were put aside along with expectations, processes, and particular ways of working to a more collaborative form of engagement.
Looking forward, the industry faces an ongoing pandemic and many other challenges such as emerging channels, evolving business models, rising costs, and calls for greater social and environmental consciousness. And at the centre of it all, consumer needs and expectations are evolving faster than ever. In a recent article by Bain & Company, six strategies were recommended to achieve ‘growth for both’ US brands and retailers:
- Decide where to focus your efforts
- Understand the other sides’ strategy and P&L
- Recognize that their timeline and planning horizon might be different from yours
- Be transparent on areas where there is value to be created
- Raise the number and quality of touch points
- Track the progress
To add to this, Advantage Group, emphasize collaboration as the critical prerequisite to achieving growth for both. Suppliers who are strong in collaboration will find that these strategies can lead them and their retailer partners on the pathway to sustainable success with great speed, efficiency and even enjoyment. There will be no sustainable pathway to growth for both retailers and suppliers without collaboration lighting the way. And, many will agree it’s simply more rewarding to work with collaborative partners.
The good news is that a lot of the opportunity for collaboration sits within business relationship fundamentals. Consider:
1. Prioritizing Relationship Communications
The bar can be raised when it comes to improving and prioritizing how suppliers communicate and manage their relationships with retailers. Even leading suppliers in the US marketplace have a gap to close when it comes to absolute customer satisfaction. Understanding the customer’s strategy provides insight into their needs for today and what it will take to partner and win with them tomorrow. Strong and frequent communications ultimately lead to building and maintaining trust between business partners. We have also seen transparency emerge as a key differentiator in business-to-business partnerships.
As one US retailer shared:
“If suppliers only knew what we dealt with every day, they wouldn’t worry about telling us the bad news, it’s just better that we know so we can plan accordingly”.
In 2020, the top-rated US suppliers in the Advantage Report all performed well above industry average with regards to these critical relationships competencies of understanding their customer’s strategy; communication; responsiveness and ultimately building trust.
2. Proactive Category Collaboration
Category Development requires intentional effort to create a sustainable competitive advantage. The cyclical process has three critical inter-dependent competencies: category objectivity, insight and optimizing assortment. US suppliers who value these competencies are prepared to look beyond their own objectives, collaborating with their customers focusing first and foremost on shopper needs. This wider lens and genuine intent wins trust, builds partnership and strengthens customer engagement overall.
How to achieve growth in today’s environment is surely the single greatest preoccupation of both retailers and suppliers. This common goal has such power to unite if it is underpinned by the spirit of collaboration and a way to measure and manage progress of the critical competencies that fuel it.
Advantage Report provides the measures that matter to help retailers and suppliers be better together. Advantage is devoted to helping suppliers strengthen retailer engagement through data, insights, and action planning. Contact an Advantage Advisor today.