Grocery retailers. A target for criticism.

It’s a difficult world out there.

You’ve probably seen a lot of news and commentary in your feed, so I won’t repeat it all here. But to sum it up, there’s a lot of people criticising Grocery retailers.

This seems to stem from the value equation for the shopper being quite straightforward. Can I get the product I want, when I want it, at an affordable price? The answer to that question right now quite often being… no.

But does that mean Grocery retailers no longer care about a strong value offer? Are they profiteering at a time of disposable income crisis? Is what they say about “being the customer’s champion” just hollow words?

If you add up the multitude of delistings, pack size changes, product availability issues and sudden upward changes in pricing, it doesn’t look good. What the shopper is offered now by a Grocery retailer compared to 12 months ago has gone through a dramatic and negative change.

It’s quite easy to sit back as an expert commentator or member of the media and criticise everything that doesn’t look right in a Grocery retailer.

But what about you as a supplier? Are you frustrated? How are your cost price negotiations going? Do you feel they treat you fairly? Do you think some of the decisions they take are just plain wrong?

If you are a frustrated supplier and criticise the retailer in your head, with colleagues or to their face, here’s my advice to you.

Don’t.

They are your customer.

They are your route to the consumer.

They are facing incredible challenges in the way they are running their businesses, just like you are.

They are going to make mistakes… just like you are.

If you take pricing alone, pricing elasticity models are going out of the window as we’re going through unprecedented levels of inflation and there’s no meaningful history to feed the models.

And don’t forget that Grocery retailers operate on wafer-thin margins and a downturn in their business is going to hit them very, very hard and extraordinarily quickly.

I suspect they are all working incredibly hard to improve their value proposition and be the customer’s champion, even if they don’t know how yet and are making mistakes as they try to figure it out.?

Helping your buyer be the best they can be

Your best choice is to help them be the best they can be.

Here are 10 ideas to help you help your buyer in these very difficult times:

1. ? ? ? ? Go out to 3 different stores every week and write a weekly report for the buyer on what you find. Go out and see what’s happening for real, tell your buyer what you have found and what it means. Don’t only rely on a 3rd party report. Your insights can give your buyer ammunition internally to make things better.

2. ? ? ? ? Identify part of the category that they under-trade in and build a plan to help them grow it. They could under-trade from a competitive perspective or because their shoppers have a higher emerging or latent desire for certain types of products. Take the opportunity to your marketing team and ask them how your brands could help. Take the plan to your buyer and show them you are thinking about them. Your plan can give your buyer a new way to hit their targets.

3. ? ? ? ? Make sure you really understand product supply. Have you ever been to your factories and distribution centres and followed the full process from raw materials to dispatched product to see what can go wrong? Have you ever been to your customer’s distribution centres? When you visit a store do you go to straight to the shelves or to the backroom as well? Do you understand how the store layout and their stock systems can create problems with availability? Your knowledge will help you find solutions with your buyer that can help mobilise their colleagues towards solving them.

4. ? ? ? ? Ask new questions each time you have a meeting with anyone in the retailer. New questions drive creativity. What’s one thing I could help you with that you’ve never asked me to help with before? What part of our Trading Plan are you most excited about for next year? How are you measured personally? Is there a piece of insight you are finding hard to get hold of that would really help you make a critical decision? Do you feel I give you enough of my time and am I focusing it on the right things? Have any other suppliers done something great that we should replicate? Your questions can generate new ideas that can help your buyer deliver betters results.

5. ? ? ? ? Stress-test every part of your Trading Plan from the retailer’s perspective. Does it create value for their category and, if so, how much and for what segments of the category? What problems could executing it create for them in-store? Have you spelled out the impact of external factors that are outside of your/their direct control that could unpick the fundamental assumptions in the plan e.g. regulatory changes, inflation, store openings/closures? What happens if the competition reacts? Your stress testing will make your plan work better for your buyer.

6. ? ? ? ? Understand all possible negotiation variables. Unpacking all the negotiation variables that go a long way beyond cost price isn’t a defensive negotiation tactic. It’s a really helpful way of examining all the different levers that can be pulled to create value for all parts of the value chain, especially the retailer. See my previous newsletter that’s got some extra tips on this subject. Your broad ideas for growth and cost saving will help your buyer find ways to offset cost price inflation.

7. ? ? ? ? Make probability a key element of planning. No plans are certain, even for tomorrow. Too strong a desire for certainty creates future operational rigidity. Having a process to manage uncertainty, where you pro-actively discuss the probability of each element of a plan happening and delivering the intended result, keeps planning agile. Your discussions on probabilities will help your buyer help their internal functions plan in a more agile way.

8. ? ? ? ? Elevate pricing and promotion discussions to focus on pack, price, & promotion architecture. Pricing elasticity is a great tool for modelling purchasing behaviour… if prices in the past aren’t too far off from what they will be the future. But if the change is too dramatic it’s unlikely to provide any meaningful insight. With the scale and pace of change currently underway, now is a good time to plan pricing and promotions by stepping back to focus on the pack, price, and promotion architecture. Are pricing and promotions driving people to the right packs that support their consumption and shopping needs? Are prices anchored appropriately to the ‘known value item’ or lacking structure? Are promotions driving desired changes in consumer behaviour or are they damaging price perception? Your focus on pack, price and promotion architecture will help your buyer make lower risk pricing moves.

9. ? ? ? ? Help your buyer secure the optimal investment from you. The amount of investment you make available to a retailer is typically limited by conditionality and specific counterparts rather than a fixed internal budget. Ask your retailer this question… “If you were to choose between 1) a bigger investment pot from us but with more conditionality, 2) the current amount of investment with the current conditionality, or 3) a smaller investment pot with less conditionality, which would you choose?”. If they show any inclination to option 1), then get to work on creating an investment plan where you can expand your investment pot for them if they deliver specific counterparts that are critical for mutual success and secure your return on investment. Your approach to optimising investment will help your buyer find new ways of achieving their objectives.

10. ? ? Fix a problem for your buyer within a week of reading this. Your buyer will have lots of problems that urgently need fixing for them to be more successful. Create a list of everything you can think of that could be a problem right now for your buyer. Try and get it to 20+ things, not 3 or 4. Plot each problem on a quadrant where the one axis is about whether you can influence a solution e.g. ‘Outside Control/Inside Control’ and the other is about the complexity of delivering the solution e.g. ‘Hard/Easy’. Hopefully, you will have some things in the top right ‘In-Control/Easy’ quadrant. Using one or more of these, write an email to your buyer to say “I’ve been thinking that this (….) might be a problem for you, and I think we could fix it in this way (….). Would you like me to spend a bit of time on this and report back next week?”.? Your buyer’s problems are urgent so your offer to help them should be urgent too.

Trading relationships with retailers are difficult and complex

Over nearly 30 years, I’ve seen every possible type of trading relationship from the most strategic and collaborative to ones where the supplier must submit their ‘offer’ through an online blind tender.

But one absolute consistent recipe for success I have seen is suppliers taking a leadership position in the Trading Planning process with the retailer. That means helping the buyer and their colleagues create a better future by leading them towards it.

If you can help your buyer help themselves, you are putting yourself in the best position to be a leader.

I am happy chat with you about any aspect of Trading Planning. So do please drop me a note back if you are interested to explore some new ways of doing things and do forward my newsletter to others if you think they would find it useful too.

If you want to learn more about best practice Trading Planning, here’s one of my most important video tips for you, "Know when to engage the retailer":