For suppliers, collaborating with retailers is essential in successfully executing a sustainability agenda. Unsurprisingly, the road to alignment on sustainability is complex. It requires bilateral efforts to create an environment conducive to a good working relationship. The critical success factors for high-performance engagement on sustainability lie in engagement, precisely, the Advantage Engagement Framework, a key component of Advantage Report.
In this article, we sourced data from the 2022 Advantage Report Australia Voice of the Customer and analyses from Advantage Australia Managing Director Steve Andrews, and Advantage Group Director of Client Service, Mark Emery.
Supplier-retailer engagement in sustainability remains a problem in Australia
The sustainability agenda for many of Australia’s leading suppliers has been set and supported with targets for carbon neutrality, water usage reduction, sustainable palm oil, sustainable packaging, and waste reduction. Retailers have similar priorities. A number of Australia’s most prominent retailers have listed net zero operational greenhouse gases, waste reduction, water reduction and sustainable packaging as part of their sustainability agenda.
However, the high priority of sustainability in retailer and supplier strategies does not transfer to a high priority for engagement between suppliers and retailers. In the 2022 Advantage Report Australia Voice of the Customer, sustainability as a priority in supplier-retailer engagement ranked near the bottom. Retailers know that suppliers have sustainability agendas but lack visibility and are often uncertain about how it aligns with their own.
So, we know that sustainability is a key strategic pillar for suppliers and retailers. We know that CPG executives are looking to ensure the achievement of their sustainability outcomes. It seems clear that there is a development opportunity to improve collaboration between trading partners to amplify the impacts of their efforts.
The value in engagement defined by the Advantage Engagement Framework
Based on our extensive research, four pillars of performance represent supplier-retailer engagement in the current and future FMCG landscape. These four engagement drivers — Partnership, Execution, Reputation and Vision — underpin the Advantage Engagement Framework.
Together, they define a high-performing supplier-retailer relationship as having the following:
- An acceptable and pragmatic working relationship
- Clarity and performance of operational basics
- Trust in each other’s leadership and values
- Collaborative development of innovation, knowledge and growth
Analyzing the four engagement drivers allows us to apply our in-depth research to sustainability — an area where a gap in perception exists between some retailers and suppliers. It also provides the opportunity for us to merge present and future-focused components into our approach, ensuring it is both successful and sustainable in the long term.
The pathway to successful engagement on sustainability
We applied the uniqueness of collaboration around sustainability and, under each engagement driver, determined the factors suppliers require to strategically navigate their retailer partnerships and engage successfully on a sustainability agenda.
Partnership
This engagement driver prioritizes collaborative business planning with a retailer to achieve strategic goals. Suppliers must clearly communicate their sustainability objectives through joint business planning sessions. This allows retailer partners to align by linking it to their objectives. You’ll find that collaboration is used to push partners to find value in each other to drive mutual success.
What do suppliers need to do?
- Develop and demonstrate a clear understanding of their retailer partner’s strategies and targets and how it relates to theirs
- Initiate and use joint planning processes to align on sustainability initiatives
- Instigate and drive collaborative sustainability initiatives
- Demonstrate responsiveness to retailer-led initiatives and a willingness to leverage retailer expertise
Execution
Execution analyzes the ability of suppliers to deliver marketing programs that reflect their environmental commitment and drive meaningful and informative sustainability messages through their consumer and marketing communications.
What do suppliers need to do?
- Develop joint initiatives which can be communicated effectively to the retailer’s consumers
- Focus on consumer marketing, which promotes sustainability credentials, because it is key to strategic and tactical commercial decisions
- Communicate current or completed actions on the sustainability agenda because it builds confidence in retailers
- Build awareness of competing priorities between sustainability and necessary short-term commercial decisions
Reputation
Reputation highlights the long-term suitability of a supplier in the sustainability space. The supplier should demonstrate cross-functional alignment across their business through consistent messaging and initiatives.
What do suppliers need to do?
- Consistent and frequent communication on the sustainability agenda to ensure that the development progress maintains high value
- Assign responsibility to a commercial leader to establish collaboration on sustainability with key retailer partners
- Ensure sustainability experts from both sides are closely involved in joint planning and exploring opportunities to collaborate
- Maintain a consistent sustainability message and focus from all levels of seniority/management
Vision
Vision indicates that the supplier must remain agile and adaptable in an ever-changing landscape to engage in product and business innovation. There must be clear objectives around innovation sustainability to ensure that it remains top-of-mind for them in the long term. Supply chain changes should contribute to sustainability goals and be viewed as opportunities.
What do suppliers need to do?
- Be reliable for industry-leading thinking and responsive to technology-enabled opportunities
- Demonstrate leadership and commitment to sustainability through product and business innovation
These critical factors educate suppliers on what is required to succeed on a collaborative sustainability agenda with retailers. Understanding how your retailer partner perceives you under each engagement driver is essential in determining your strengths and areas of opportunity.
Advantage Report provides the feedback and insights needed to understand and connect with your business partners on opportunities for mutual success. Connect with Advantage Australia to learn more about how you can develop a collaborative sustainability agenda with your retailer partner.
