“We want to be Category Captains!” was the specific objective of a certain senior sales manager I coached recently. And he is not alone. Despite cases of disappointment far-outnumbering the success stories, the goal of ‘strategic alliance’ between retailer and brand seems to be ever-pervasive. The benefits of collaboration between brand and retailer are well documented elsewhere. Data sharing, supply chain efficiency, forecasting, clarity on consumer and shopper: all are potentially within the remit and grasp of retail collaboration. With so much to be gained, why then, is it so difficult?
Retail collaboration fails because of mismatched expectations
We’ve all dreamed of walking hand-in-hand into the sunset. And some of us might have dreamt of that in a manufacturer/brand context! The reality is, however, in my experience very few retail collaborations reach the longed-for heights of “true partnership”. Like any long term relationship retail collaboration requires significant commitment and a fair dose of compromise. Unless both parties are massively significant to each other then the appetite for either commitment or compromise is likely to be lacking. More frequently, one party (often the retailer) is highly significant to the other, but there is a mismatch. The manufacturer is (relatively) unimportant to the retailer. In these circumstances there is likely to be a huge variance in the willingness to invest, and compromise to achieve mutual goals.
Which brings me on to the second reason for retail collaboration failure – ignoring the fact that there is a relatively small cross-over between brand and retailer goals. Both parties wish to grow sales, but in fundamentally different ways. A retailer wishes to drive sales of their categories, and cares little which brands drive that. Conversely, a manufacturer is seeking to drive brand sales, with little concern for where those sales take place.
Retail collaboration fails when manufacturers are treated as a source of revenue
This conflict is most obviously seen in the way certain retailers account for payments from suppliers. As we have seen from the various scandals around Tesco’s accounting methodologies, manufacturers aren’t merely suppliers – they are a source of revenue too. It is hard to see a pure partnership developing under circumstances where one party is incentivized to reduce the profitability of the other.
Retail collaboration fails when we go “straight to the church”
It would be a risky choice to marry someone on your first date. And yet it appears that many manufacturers think that they can go from “Hi” to the altar in one step. Two parties, thrust into such a close relationship with no understanding of their compatibility are relying far too much on luck, rather than judgement, to have a serious chance of future happiness.
Retail collaboration fails when we choose the wrong partner
After one break up my dear mom told me “She was never right for you”. While meant to comfort it was a little disheartening, and I was left wondering why no-one never told me that at the outset. Not all retailers and right for all manufacturers, and vice versa. Possibly the most important key to success and longevity in relationships must be to pick the right partner in the first place.
Successful retail collaboration – Getting started in the retail ‘dating game’
So what should potential suitors do? While significant analysis isn’t always possible in the dating game, it is when picking retail or manufacturer partners. Here are six steps that, while not guaranteeing successful relationships, can go a long way to improving the odds of ‘happily ever after’.
Decide what you are looking for in a partner
The relationship won’t work unless a fair number of your needs are met. Work out what are the ‘must haves’ and what you might be prepared to compromise over. Remember too that the relationship doesn’t have to be ‘all or nothing’. At the same time look at those requirements from the other party’s point of view. Meeting your needs is one thing, but if they are unreasonable, then this isn’t going to fly. Consider what the other party might be looking for, and consider whether you would be prepared to acquiesce.
Check out the options
Against your check list, check out the market. Check which partners might measure up. Which one’s don’t? Which stand to deliver the biggest benefits, particularly in the longer term (it will take a while to get this moving! Don’t pin all of your hopes on the partner of your dreams (the biggest customer, for example): they might not be as perfect as you think (and they just might not be into you!)
Go on a first date
With a short list in hand, time to make a start. No need for exclusivity at this stage, we’re just dating after all! By the same token, don’t be surprised if your counterpart is playing the field too! Keep in mind your wish list and needs, and take note of any annoying habits.
Thinking you’ll stop the retailer doing those annoying promotions ‘later’ is like thinking you’ll train your man to put the toilet seat down ‘after we’re married’!
Set ground rules
By this I don’t mean a long list of do’s and don’ts, but a simple list of ground rules that each party sees as reasonable. “Don’t work with my competitors” might be hard at this stage. “Keep me in the loop for your plans for the category” may be more reasonable. Stand your ground on these rules, and watch out for a retailer who is only into you for one thing!
Start where there is common ground
Go for the quick wins first – simple processes that add value to both parties and require minimal compromise and resource from both sides. Build trust and success with easy things, before asking for a major compromise.
Know when to call it quits
Not every relationship has to be forever, and there can be plenty of value had from more casual, short term relationships. The same goes for business. If it isn’t working, or there is no longer enough mutual value, then call it quits. Handled well it is perfectly possible to go back to being ‘just good friends’!
There are many elements that go towards making retail collaboration successful. If you’d like some retail collaboration dating advice, please contact me.