South African suppliers share their perspectives on the six critical areas driving retailer investment over the last three years, 2019-2021.
Are you looking to increase your share of supplier spending? According to suppliers, the following experiences represent what to avoid and prioritize across business relationship competencies measured in Advantage Report South Africa Voice of the Supplier.
Implementing plans
“Retailer X expects us to provide incremental funding. They approach us with opportunities, saying they will give us the benefits we also need. Some things they deliver on, but for many things, we are still waiting to see action. Many times, they do not implement the strategy discussed at the head office level. They become a very expensive business to work with…” -South African Supplier
Store execution
“Retailers still do not believe us when we talk about how we see the reality of where profit pools are measured. Our costs are high, and business is difficult, so if you can’t execute the programs you say you will, we simply won’t put money into your business. The costs need a return. Otherwise, we will put the money elsewhere, and it all gets down to how they execute.” -South African Supplier
Strategic approach
“The Management within Retailer X are able to move between tactical and future strategy. They can talk about the detail of ranging and store-level decisions—then they helicopter up to 20,000 feet and focus on what the future needs to look like and their big-picture strategy. They know their business well and give us confidence that we can invest more funds with them.” -South African Supplier
Mutual outcomes
“Retailer X treats our company fairly. They discuss their business challenges with us, and they are keen to understand the challenges our business faces. They show a sense of balance in most discussions and that shared outcomes mean something. We then look for ways to resolve these things together rather than push back and open up more opportunities.” -South African Supplier
Forecasting support
“As we establish stronger supply chain relationships, we uncover ways of working more efficiently. These conversations lead to stronger relationships. More visibility of needs with good forecasting allows us to be agile and adapt to whatever they tell us is coming and to look at more opportunities with the Retailers business.” -South African Supplier
Category Management
“Retailer X [has] highly experienced personnel that know how to buy and why. They understand the insight to make up of products, how the range is put together and which aspects add value. They are keen to have the best performing range for the shopper to transact with. They are highly focused on quality and innovation; their process builds our confidence.” -South African Supplier
Supplier relationships are a critical differentiator in addressing current and future challenges. For this reason, supplier engagement is crucial to unlocking your business’s full potential.
Navigating the evolving retailer-supplier landscape in South Africa requires objectivity, data and analysis across multiple data points. Most retailers know a lot about customers, shareholders, and employees; however, supplier relationships may be a critical differentiator in addressing current and future challenges.
When considering business-of-today execution and business-of-tomorrow sustainable development, suppliers are the stakeholders crucial to EDLC (Everyday Low Cost) and EDLP (Everyday Low Price) outcomes. Advantage helps retailers understand more about how invested suppliers are; this is essential in a constantly evolving retail environment faced with the following:
- Supply disruptions
- Shopper preferences (digitization, sustainability, good corporate citizenship)
- Pressure on finances (rising costs, inflationary pressures and global financial crisis)
- Human resource quality and availability
- Lack of innovation
The retail business environment is constantly evolving, and the pace of change is accelerating—understanding supplier behaviour and needs is vital to successful engagement. We have learned that:
- Suppliers invest more in resources, innovation and discretionary spending with retailers with a better relationship.
- There is an evolution in retailer-supplier relationship dynamics with a movement towards a closer partnership, a way of engagement that reflects this, and a move away from “old school” trading.
- One-to-one feedback often has a bias regarding agendas and risk from transparency. This is mitigated when it is anonymous and relative to other competitors.
Data and insights are only as good as how you interpret them in context and relation to your operating model, capabilities and resources, culture and leadership. Connect with an Advantage Advisor in South Africa today.
