Notably, 57% of South African retailers improved their overall performance in 2021: a significant accomplishment during a year that saw disruptions and a confluence of external pressures.
Advantage Group works with retailers and suppliers worldwide, providing data-based insights for mutual growth and enhanced competitiveness through an unbiased, anonymous third-party platform. Our syndicated engagement program, Advantage Report provides clients a benchmarked view of performance as rated by their business partners, providing them with valuable data regarding their business relationships’ strengths, weaknesses, and opportunities.
We consider data from three levels in the business: strategic high-level trend indicators (often used at the board or executive level), operational/functional signals (used for multi-functional development programs) and category or account insights (cross-category results, often used by the category buyers, or account level feedback for suppliers).
Evolving Retailer & Supplier Relationship Dynamics
South African retailers, suppliers and consumers continue to demonstrate resilience in a challenging economic environment. Multiple local crises combined with the global pandemic, supply chain disruptions, and impending financial crisis continue to strain businesses. Data collected by Advantage shows that organisations have responded to these crises differently and have experienced various levels of impact.
Interestingly, the results for South African retailers and suppliers from 2021 were the third most volatile globally, and the most volatile across emerging markets. This is indicative of the operating environment and varied responses to these crises.
“The route to market, manufacturing process, supply chain, operating model, capabilities and resources, culture and leadership varies, yet suppliers and retailers compete in the same market. What we have seen, across our global results, is that those companies that have given more focus to customer and supplier engagement have improved their Advantage results.”
Dylan Piatti, MD of Advantage Group Africa
When we look at the year-on-year industry trends of supplier results, it’s interesting to see an increase in satisfaction scores across all KPAs from 2019 to 2020 – a clear indication of increased engagement levels in response to the Covid-19 crisis. However, from 2020 to 2021, we see some declines in Strategic Alignment, and Category Development, while Overall Performance results and Supply Chain have plateaued.
“…the language we engage and collaborate and plan with our suppliers is different and has changed significantly. We have to become more collaborative as trading partners”
South African National Retail Executive
Strengthen eCommerce Capabilities for Partnership Longevity
A few key highlights emerge from the 2021 program findings on eCommerce. These include:
- A positive indication that retailers are more willing to test and learn in eCommerce, and importantly, trading teams are dedicating attention to online business development.
- Clear signals that suppliers are seeking greater integration of eCommerce into JBPs.
- A perceived low satisfaction from suppliers regarding the commercial value in online partnerships with retailers.
“For having an integrated e-commerce strategy, best in class suppliers have dedicated resources in their business, and they have separated it out. They have someone that engages with our e-commerce team. They make sure their products come up first in the search engines. There is a lot of science that sits in this space. They are engaged and prepared to put money behind e-commerce. The more global companies understand e-commerce’s importance because they have seen it translate in other countries.”
South African Grocery Retail Executive
We asked South African suppliers how suppliers and retailers can work together to minimise the cost impact on profitability and maximise revenues given the increased shift to eCommerce. The four most common recommendations on areas of focus were:
- Maintaining stock availability both online and in-store is crucial
- Build internal logistics capabilities or identify affordable third-party vendors
- Increase the ease of online buying for consumers across platforms
- Ensure fair distribution of costs associated with eCommerce
“E-commerce is certainly a channel that the retailers see opportunities in. It is up to them to ensure the model is profitable. They cannot create a business channel and then expect a supplier to fund it because they have not created a profitable model. They should think about offering products that deliver good Rand value profitability.”
Supplier Executive
2021 South African Program Participation
This year’s South African program is a result of impressive dedication by the industry to strengthening retailer and supplier relationships:
- Over 1,100 in-depth survey responses received
- Over 250 one-on-one telephonic interviews conducted
- 29 retailers rating suppliers with more than 45 suppliers benchmarked
- 38 Suppliers rating retailers with 48 retailers benchmarked
- Over 2,500 codified verbatim commentary
- 39% of retailers’ overall performance declined, with one retailer remained the same as 2020
Suppliers and retailers are measured on over 24 competencies under the KPAs of: Strategic Alignment/Business Relationship; Personnel; Category/Business Development; Retailer/Wholesaler Execution; Consumer Marketing; Trade & Shopper Marketing; Supply Chain; Customer Service; and Ecommerce / Webshop Execution.
Companies are ranked in a competitive rank set (defined by the Core/Main RS, which is the top suppliers and top retailers across Grocery and Liquor). Other rank sets include categories (e.g., Personal Care, Homecare, Snacks & Beverages, Wholesale Retail, Modern Retail, Ecommerce). Company scores are calculated as Net Favourblility (NF) which is the difference between positive and negative quantitative feedback. Key Performance Areas and Competencies can be viewed as trends over time to track both competitive movements and overall scores (NF).
Navigating the evolving retailer-supplier landscape in South Africa requires objectivity, data and analysis. Trust in Advantage Report to guide you through the complexities of strengthening business partner engagement today. Connect with an Advantage Advisor in South Africa.
