Advantage Logo White
Advantage Logo White
Advantage Logo White

Select the Advantage platform that fits your needs

Help Desk
Published: June 23, 2023

Retailers and suppliers are currently in a fragile and challenging negotiating environment. The pandemic, inflationary pressures, increased consumer price sensitivity, and geopolitical factors combined create an environment that breeds uncertainty and strains the relationship between retailers and suppliers.

To mitigate these pressured conditions, it is critical that retailers intentionally prioritize suppliers and nurture their relationships. By actively engaging with suppliers to collect feedback and benefit from their expertise, retailers can gain important insight to forge stronger connections, navigate challenges, and seize new opportunities in the dynamic retail industry.

This article explores critical aspects and highlights the significance of the Advantage Engagement Framework, prioritizing strategies that improve factors such as ease of doing business, execution excellence, reputation-building, and fostering a shared vision to strengthen retailers’ relationships with suppliers.

Four Strategies Retailers Can Use to Strengthen Supplier Relationships

These strategies leverage Advantage Report Voice of the Customer and Voice of the Supplier program data collected in 38 markets from 526 retailer organizations and 4,524 supplier organizations from February 2022 to January 2023.

1. Enhance Ease of Doing Business (Partnership)

Suppliers recognize that the “ease of doing business” is the foundation of successful retailer-supplier engagement. Retailers and suppliers experience similar difficulties, such as inflationary pressures, supply chain challenges, talent shortages and evolving ecosystems. These factors have impacted profitability, making relationships more difficult to manage.

Retailers can seek to strengthen supplier engagement by partnering to manage price changes efficiently, fostering collaborative planning. Best-in-class retailers interested in enhancing their ease of doing business prioritize effective communication, availability, and problem-solving capabilities. This creates a conducive environment for suppliers to thrive amid challenges.

2. Advancing E-commerce Integration (Execution)

As the pandemic accelerated the shift to e-commerce, suppliers and retailers faced the challenge of seamless integration. While retailers have made significant strides in developing their online platforms, e-commerce integration will remain an ongoing learning process as technology evolves. This means that retailers need to take a consistent, active role in helping suppliers with e-commerce integration by providing the following:

  • visibility into retailers’ strategies
  • clarity on resource allocation
  • support for effective execution

Retailers must provide suppliers with the insight needed to execute their e-commerce integration effectively, leverage best practices and proactively address the challenges of the digital landscape. As a retailer, you are ultimately helping suppliers to:

  • respond to variables outside of their control – the pandemic made e-commerce integration with retailers even more essential as consumers were homebound and required updated inventory
  • maximize efficiency – this is particularly important for responding to changes in consumer demand
  • reduce costs – e-commerce integration enables suppliers to make more informed and data-led decisions

3. Collaborate on ESG and Build Trust (Reputation)

Trust and reputation are foundational to successful retailer-supplier relationships. Retailers must establish and strengthen trust by prioritizing fair and equitable engagement, delivering on commitments, and actively addressing suppliers’ needs. Collaborating on Environmental, Social, and Governance (ESG) agendas is a strategic opportunity for stronger partnerships.

Retailers should engage with suppliers to set mutual ESG agendas, communicate priorities, influence shopper behaviour, and build reputations as sustainability advocates. Active engagement, beyond passive (and performative) means like social media, helps retailers differentiate themselves and gain a competitive edge. Through collaboration, retailers can work with suppliers to make meaningful changes and craft impactful ESG strategies that help to achieve each other’s goals, contribute positively to the world, and improve their reputations with consumers and business partners.

4. Empower Innovation Through Collaboration (Vision)

In the post-pandemic era, suppliers and retailers grappled with a lack of predictability in shopper behaviour, channel switching, and inflationary challenges. Suppliers seek to seize new opportunities through innovation while mitigating risk to help with this volatility.

Retailers can play a pivotal role in this process by sharing insight and intelligence through actionable data, collaboration on category development strategies, and developing environments conducive to innovation. Retailers capable and willing to merge and share data sources drive value for suppliers. Additionally, they must lead in digitization, sharing best practices to help suppliers maximize efficiency and minimize the effects of the volatile business landscape. By aligning on innovation priorities, retailers can help suppliers navigate uncertainties, drive consumption at the point of sale, and create sustainable growth outcomes.

Advantage’s Voice of the Supplier program is pivotal in shaping successful partnerships between suppliers and retailers in the rapidly evolving retail landscape. This program leverages four engagement areas — Partnership, Execution, Reputation and Vision — to provide retailers with feedback from suppliers on the quality of their relationship. In a dynamic retail landscape, fostering strong partnerships based on mutual trust, effective communication, and shared goals is essential for long-term success and resilience. Get in touch with an Advantage Engagement Advisor to learn more about our programs.