How are manufacturers failing retailers?
Through a special arrangement, presented here for discussion is a summary of a current article from Frozen & Dairy Buyer magazine.
Outside of rock-bottom prices, what can manufacturers do to help their retailer partners — and, by extension, themselves — succeed? For starters, they can stop treating every chain they supply the same way.
Whether through a unique value proposition, assortment, customer service or a myriad of other variables, differentiation has become a critical retailer strategy. Bob Shaw, president of Concentric Marketing, reports that a shockingly high number of manufacturers spend a tremendous amount of time and effort trying to shove the same products and programs down every retailer’s throat, regardless of whether or not it makes sense in a particular chain’s set.
Moreover, with retailers focused on growing the category, manufacturers should forget about presenting items or strategies that merely swap share between brands.
Added Cadent business analyst Maxwell Legocki, “Establishing your brand as a leader in consumer insights — coupled with both product innovation and strategy — can give you the staying power required to achieve long-term growth.”
While the largest manufacturers are often praised for providing category insights (knowledge doesn’t come cheap), small manufacturers may have first-hand knowledge of some of the fastest-growing niche segments.
One of retailers’ biggest complaints about manufacturers is their failure to accurately predict demand. “Good suppliers share insights that help retailers improve product forecasts and make smarter decisions around purchase volumes,” says Ken Morris, principal at Boston Retail Partners and a RetailWire BrainTrust panelist. “They also help retailers minimize out-of-stocks with insights into delivery schedules, the impact of the manufacturer’s advertising and promotions calendar and enhanced forecasting data.”
Manufacturers also often develop pricing strategies that are non-collaborative and one-sided. Said Mr. Legocki, “Manufacturers underestimate just how much retailers need to understand the ‘why’ behind the pricing.”
Buyers are also bothered by “a constant stream” of new item introductions and line extensions, often without adequate consumer support or even testing, as well as the little forewarnings that often precede package changes — box to bag, smaller or larger size, new dimensions, etc.
On the positive side, while the balance of power has shifted in their favor, retailers seem more willing to support strong partners in the increasingly competitive marketplace.
DISCUSSION QUESTIONS: What shifts in the retail/manufacturer relationship are suppliers downplaying or failing to recognize? Of the retailer complaints listed in the article, which is most important for suppliers to address?