Archive for January 29, 2013

Brand-Retailer Relationships: “Partnering” or “Biting the Hand that Funds You”

When the Food Marketing Institute met this year for its annual warm-weather retreat, aka, The FMI Midwinter cooperationsConference,  one of the topics that is being touted was “partnering”, specifically between the Food Marketing Institute and the Grocery Manufacturers Association, (GMA). A perfect partnership opportunity for the two major food industry organizations to combine forces, share expenses and develop notable synergies.  Stay tuned, but I see no reason that this new marriage should be a long a prosperous one.

But as for the members of these two fine organizations, the individual brands and retailers, “partnering” has produced mixed results.  Over the last twenty years several industry movements have served as catalysts for partnering.  Category Management (CM), Efficient Consumer Response (ECR), and more recently Shopper Marketing-Path to Purchase (PTP) have led to co-authored and co-funded studies that lead to books and presentations.   But lasting partnerships among brands and retailers, not so much.

Reasons for less than optimal results abound. The truth is that on key cultural and process issues, brands and retailers are wired very differently. Retailers live in the moment.  Brands often live in the future.  Retailers adjust the components of their business hourly, while brands deliberate and strategize over months and years.  Brands move managers and executives relatively quickly through their organization, while retailers tend to keep their team members in positions longer.  Both feel they “own” the customer and are keenly anxious to extend that advantage.  For these reasons and others, many retailers continue to “bite the hand” that funds them.  In turn, brands continue to believe they represent a significant portion of the retailer’s life to form a direct to shopper relationship.  Both practices are unwise and bode poorly for the future.

Technology and a sagging economy have nurtured a new variable, namely an empowered shopper.  This shopper has ceased control of the conversation and is quickly demanding better information, more relevant deals, and more efficient shopping alternatives that only the brand and the retailer together, can deliver.

Loosely translated, retailers with data and new shopper touch points need shopper insights and content from brand to attempt to satisfy the insatiable appetite of the new empowered shopper.  Sure, brands and retailers can try to go it alone, but given the short window of opportunity, new competitors pouring through that window each day, and the impatience of the shopper, it is hard for me to image anything but the power of a well formed partnership providing the best solutions for the new millennium.

As with all things that yield positive and timely results, there are requisites for success.  Here are some.

  1. Lasting partnerships are formed typically at the top of each organization.  The commitment must be clear and consistent.
  2. A good partnership has an accountable contact person on each side of the relationship, who must answer the bell when things get bogged down or do not flow as expected.
  3. Outcomes must be clearly communicated with success metrics known to all.
  4. There must be equal or near-equal benefit from the relationship.
  5. The partnership must grow and evolve, rather than stagnate and become mundane.

Perhaps the conversations at FMI Mid-Winter will serve as a harbinger for further brand-retailer alliances.  The shopper is waiting….waiting…waiting…

 

mh

 

 

 

 

 

 

Taking “Price” Off the Table

For those of you in retail, I challenge you to survey your shoppers with a simple question….

           “If you could change one thing about our stores, operations, and services, what would it be?”

0809_LowPriceArrowFrom my experience over the years in retail,  the overwhelming answer to this query will be ‘LOWER YOUR PRICES’.  In fact, this response was so dominant our consumer surveys were designed to deflect this common response.  To do so we added the caveat, “Other than lowering prices, what would you like to see changed….”   Yes, we worked overtime to take “price” off the table and out of the discussion with our shoppers.   We assumed that lowering prices was something that shoppers will always ask for, even unreasonably so.  Further, we knew that lowering our prices was really out of the question, in fact we spent endless hours looking for ways to “smartly” raise prices to achieve margin goals.

So with “price” out of the discussion, we could then move on to ask our shoppers about aspects of our operation that we actually were willing and able to change.  The lurking danger of dismissing consumer sentiments should be self evident.  Competitors often find ways to accommodate your shopper’s wishes.   When they do, sales, market share, and store traffic reflect your indifference to shopper imperatives.  In fact, the emergence of Aldi, Walmart, and other “price” formats is a function of traditional retailers unsuccessfully attempting to take “price” out of the consumer discussion, into the headwinds of declining incomes and recession.

The stark reality is that those that have successfully relegated “low prices” to something less than a shopper headline, have invested heavily into services, product quality, and store facilities.  In the grocery channel, Whole Foods, Fresh Market, Wegmans, and even Publix are among the list of retailers who understand that if you are to be known for something other than “price” and known to the extent that “price” is no longer a consumer priority, you must make a commitment to create a shopping experience that effectively changes the subject.

No silver bullets here,  but my advice to retailers who struggle with meeting their shopper’s “price” expectations would be to chose one or two areas of your operation and build service and product quality programs around those offerings. As one example, if you want to be known for the best produce in the market, actually buy and maintain the best produce and train your associates to be knowledgable experts in both product and preparation of the product. Be consistent and talk about it incessantly.  Once credibly is established as the place to go for produce, you might be surprised how much you can charge for bananas!