Teaming up results in shared benefits for both manufacturer and retailer.
The retail and consumer goods industries are rapidly changing, as demonstrated by Amazon’s recent acquisition of Whole Foods creating ripples with shareholders, other retailers and manufacturers. This is only one example of the added pressure to cut costs and make intelligent decisions to survive the increasing competition. As a result, it’s especially important that retailers and manufacturers align their objectives and embrace true joint-collaboration. It’s time to stop relying on “gut feeling” when planning and strategizing. A data-centered approach to collaboration is essential to optimize in-store performance around a common version of the truth to achieve mutually beneficial results.
Manufacturers and retailers can work together through shared intelligence to combat instability and promote future growth by assessing SKU viability, maximizing the success of a category and addressing retail execution issues that cause discord.
Typically, retailers analyze data points such as POS, loyalty card and inventory, and manufacturers track shipment, spending and any DSD or purchased syndicated data. Rarely are insights from these data subsets shared between manufacturer or retailer in a collaborative setting. Worse yet, it is equally as rare that this data is organized in a way that makes it useful in decision making.
Instead, one dynamic view can evaluate past strategic merchandising initiatives and accurately plan future deployment of trade, shopper marketing and digital media funds. With real-time access to all the pertinent data, it is possible to evaluate past strategic/tactical initiatives and predict and optimize the promotional spending mix with retailer constraints in mind.
For manufacturers, this means having the tools on hand and the commitment to integrate portfolio and category optimization in addition to the trade promotion optimization capabilities companies should already be using. The analytical insight and predictive picture that these data-driven approaches can draw for organizations refocuses strategy development and decision making on revenue generation and profitability rather than the “wait and see” practice of the past.
Similarly, retailers need to have in place the analytical tools to optimize categories within their store, which drive results and avoid sweeping reactionary changes.
With that in mind, instead of massive reactionary cuts in the name of saving the industry, decisions need to be strategic, precise and based on fact and quantifiable results. When the significant disruption to the “usual way of doing business” is viewed as a threat, people tend to respond with fear, but when it is seen as an opportunity, people respond with innovation. If retailers and manufacturers can partner to make an innovative strategy a successful reality, then they can celebrate opportunities created for growth rather than lamenting upon unnecessary loss.
Terry Ziegler is CEO and Co-Founder of T-Pro Solutions. With more than 30 years of Consumer Packaged Goods (CPG) management experience in the areas of trade marketing, consumer marketing, category management, sales and finance in leadership and management roles at RJR/Nabisco, Borden Foods, Dairy Farmers of America, Synectics Group and AFS Technologies; Terry combines innovative application with practical leadership.