5 REASONS WHY THE MAJOR RETAILERS ARE LOOKING TO COLLABORATE MORE THAN EVER
In the 11 and a half years of running Visionise we have worked with some amazing clients in some amazing places; India, Boston, New York but it was in a rainy Manchester, UK, that I experienced one of the most dramatic events.
We had been commissioned by a major international brand to help run a joint planning session with their biggest customer, Tesco. The Tesco buyer had encouraged this client to engage us based on positive previous outcomes and our “different way of thinking”, she had suggested that our main goal was to help facilitate the building of a joint Tesco category vision for growth that both parties could coalesce around.
What struck me most at the KO meeting in that boardroom in Manchester was not the fact that the team of 3 from Tesco were outnumbered by a posse of nearly 20 executives from the brand, or the palpable tension and frustration emanating from the key stakeholders gathered, it was the fact that the brand hosting the event appeared to be so far removed from their biggest customer’s needs and expectations.
Tesco couldn’t have made it clearer in that room: They wanted to co-create (with their biggest category partner) a consumer needs-focused 3 year category growth plan. What they got back in that KO session was a repetition of global brand plans, supported by a succession of biased quant and qual studies pointing to a need for brand premiums and fixture space enhancement. At the time Tesco were tracking 2-3 % points down vs the market average for the category, driven in the main by the said brand’s sub-par performance…a couple of hours in I thought I would see a walk out!
Mercifully, we managed to avert an early exodus to Hertfordshire and the initial 2-day session was successfully completed in an increasingly harmonious tone.
What really helped break through the cognitive dissonance on show was when we got both parties stood together at the fixture in various Tesco stores and to listen to real consumers spell out their unique shopping and usage needs for the category.
2 divergent mindsets began to align around a common goal… meeting consumer needs not just corporate Kpis.
So what’s the point of this story?
Well firstly, it was certainly some of the toughest facilitation I have done to date .
But it also made me reflect on the run ins and skirmishes I have had with the major multiples over my 30 years or so in FMCG they all concluded amicably, some with continuity, others with wins and some with losses but always with a professional sense of realignment and refreshed focus in spite of the table thumping advice often coming down from above and not because of it.
The key point though, is we are currently seeing a heightened level of tension in terms of supplier-retailer relationships, a fractiousness that exceeds the normal skirmishes I referred to. Not wanting to trivialise the mosaic of complex issues at play… it appears to be all about trust: Can supply partnerships really be trusted to be transparent and mutually beneficial with so many cost variables in flux and how do the Mults manage price perceptions to create trusted consumer-centric offers whilst the Discounters continue to grow market share?
The mutual trust our Industry built up through their heroic “back to the wall” actions to keep food on shelves in the pandemic has all but evaporated and the current “contretemps” over so called “greedflation ”continues to ramp up with interjections like that made by Tesco chairman John Allan.
The disconnect that exists between the new CONSUMER VALUE EQUATION: local, sustainable, inspiring, and delivered well and the RETAILER PRICING PERCEPTION: driven by lowest denominator competition and Discounter benchmarking vs actual shopper intent, is for another article, but one thing’s for sure, the timing has never been better for greater long term strategic collaboration across the supply chain.
Over the last few months we have seen increased requests from our clients for help in structuring and running joint planning sessions with the buying teams from their Multiple Retailer customers. These sessions tend to be either a day or two (on site or at a neutral location), usually near the retailer. Innovation and Sustainability seem to be the traditional areas where most common ground tends to sit but we are now also seeing requests for commercial planning (a JBP workshop if you will) and team engagement sessions across a full spectrum of disciplines.
These collaborative sessions have traditionally been hard to bring about-in the main they evolved as pro-active recommendations from manufacturers looking to build a closer partnership with their retail customer, maybe get a competitive edge but were often thwarted by calendars taken up with day to day tactical needs and a post GSCOP fear of favour. Retailers appear to now be actively encouraging these joint planning workshops.
We are seeing impressive engagement and attendance levels
In my mind there are many reasons why a new era of collaboration is developing-these are the top 5:
Retailers can see that the continuity of supply is no longer guaranteed when input prices become unviable e.g. Eggs
Overseas back up supply is proving to be both contentious and to erode trust (consumers and suppliers)
Consistent and sustainable growth is a strategic imperative for all involved and some of the multi-national big brands can now see more growth potential from emerging markets. This isn’t a new phenomenon, but it does change the balance of power in some of the main supermarket categories.
The larger own label manufacturers now have a depth of knowledge and capability that many retailers have divested themselves of over the last few years-but still need to draw upon.
In a post brexit, net zero-focused world there is a greater need for UK supplier stability-catalysed in consumer minds from the Covid lockdown experience.
Ben Fennell and Will Greenwood in their book World Class refer to the following equation
Difference x Togetherness = Growth
In essence, bringing together diverse perspectives and opinions will lead to a better exploration and refinement of strategies to enable growth. Businesses have understood for some time that teams made up of the most eclectic mix of experiences and characteristics deliver greater results than those in perpetual agreement.
Our Industry needs some new, smarter solutions to the challenges it now faces -a great starting point would be for more manufacturers and retailers to embrace strategic collaboration sessions regardless of the tactical pressures facing them on a daily basis.
6 months after that boardroom stand-off in Manchester and after an intense but fun collaborative process Tesco awarded the brand their annual strategic supplier award and the metrics all returned to positive.