Supplier demand
Are you working in partnership with your suppliers? By Peter Segal of srcg, a consultancy specialising in retail strategy, category development and training.
As previous articles have highlighted, there are many ways to increase sales at your pub. However, much of the industry is not changing fast enough to fight off increasingly hungry competitors. Why is this? I would suggest it comes down to a lack of time and resources.
This is a problem faced by every retailer in every channel in every market but some retailers are better at finding ways round it. What do they do? They collaborate with their supply base.
Take Wal-Mart, the world's largest retailer. Many of Wal-Mart's key suppliers are intrinsically involved in developing its business, to the extent that many will have desks in the Wal-Mart office and are very much a part of the category team. Indeed, there are as many suppliers in the Wal-Mart office as there are Wal-Mart staff. The store realises that fundamentally the supplier wants to be involved in the selling of its products and it is prepared to provide resources to achieve this.
Tesco has identified three different levels of collaboration within its business. Its supplier scorecard enables it to identify the level of input suppliers will have.
Level 1 suppliers have a relationship purely on a buying and selling basis and are not asked for strategic input to the category. Level 2 suppliers have demonstrated capability and a willingness to work with Tesco and they do provide strategic input to the category. Level 3 suppliers have input beyond the category as they have demonstrated broader thinking and genuine expertise.
Could this work in the on-trade?
Well, yes, a number of multiple retailers have already identified partners across key parts of their business and are working with them to implement new and innovative ways to grow sales. Can it work at a local level? Again, yes. Most suppliers have people on the ground who are well trained, willing and capable of excellent input. If they are not, you should find suppliers who are.
Sharing the burden with suppliers makes good sense but it does need managing. So here are some guidelines:
- Select who to work with
You cannot have strong, collaborative relationships with all of your suppliers so you need to make some choices. Identify which suppliers are likely to provide you with the right level of expertise, a category perspective that does not just focus on their brands and above all a real desire to grow your business.
Agree joint objectives and targets
It is imperative to be clear on the benefits for both sides. It is helpful to sketch out your own objectives and get your supplier to do the same. You can then agree on the areas of overlap. By having joint financial targets both sides can measure the success of any work undertaken.
Decide what level of input is required
Look at your sales and select a lead partner for each of your key categories and then decide whether there is a need to have specific expertise in a niche area.
For instance, you may decide to have one overall partner for beer and an adviser for cask ale. It can also be helpful to work with your most valued supplier (based on sales and credibility) at a more general level to ensure the categories come together in a coherent way.
Agree the type of input you require
Suppliers can provide support in many ways so be clear what you want from them. Sharing information and developing insights will be critical so make sure they are in a position to add value in this area.
The key benefit for the retailer will be a clearer understanding of what role each supplier will play going forward. This clarity should lead to less overlap and allow you more time to focus on your customers.Let us not forget that collaboration is a two way thing.
Just as retailers are looking for partners to help grow their businesses, suppliers are out there deciding where they should put their resources for the greatest return. Therefore, it is incumbent upon retailers to demonstrate that they have a genuine willingness to collaborate with their best suppliers.
Top tips for working with your suppliers
- Identify suppliers which are willing and capable of giving excellent input into your business.
- It is a good idea to work with a lead partner in each of your key categories.
- Look for a level of expertise and a category perspective that does not just focus on the brands that the company is trying to sell you.
- Ensure that there is a genuine desire to help grow your business.
- Agree joint objectives and targets so that you can
measure the success of your relationship. - Show a willingness to work in partnership. It can be the most effective type of business relationship.
srcg is a consultancy specialising in retail strategy, catgory development and training. srcg facilitates collaborative working between retailers and manufacturers in the On-trade, Multiple Grocery and Convenience. Tel: 020 8948 4048 or visit www.srcg.com
