Cooperation instead of confrontation between retail and consumer goods manufacturers
Increasing complexity of customer demand is forcing retailers and manufacturers to enter into new collaborations / closer cooperation as a strategic royal route / 80% of purchase decisions are made directly on the shelf
Retail companies and manufacturers of consumer goods are facing a paradigm shift: away from power struggles over conditions, discounts and payment terms, towards consistently cooperative market cultivation. 84% of the decision-makers from brand manufacturers and almost 83% of the retail managers surveyed see the close cooperation between the two areas as the most important success factor in the battle for market share, profitability and customer satisfaction. The focus is on the strategic challenge of having the right product at the point of sale (POS) exactly when the customer demands it - not just per season, but where necessary per day or even time of day. The goal is: closer cooperation along the entire shared value chain. Although the importance of the topic has apparently been recognized, only around 30% of market participants have systematically tackled such collaborations between manufacturers and retailers. And just 10% of the manufacturers or 20% of the dealers are very satisfied with the results achieved. This hesitation threatens to lose valuable market potential. This was the result of a recent survey by Booz & Company among the 100 most important retail managers and consumer goods manufacturers in Europe.
In each category, end customers can choose from countless products that they purchase through retail sales channels. "Both at the discounter and at the full-range retailer, 80% of the purchase decisions are made directly on the shelves. "The competencies and optimization processes must be focused on this.
The steadily increasing degree of complexity can only be managed if retailers and manufacturers share their knowledge about the customer," says Peter Heckmann, retail expert and partner at Booz & Company reorganize at the POS."
Approaches to cooperation exist in a number of areas, such as the definition of a tailor-made range, sales-promoting advertising measures in the branches or jointly planned product launches. There are also synergies in areas such as supply chain and logistics optimization or warehouse management.
When asked which projects achieve longer-term effects, the respondents unanimously named supply chain-related topics. 83% of dealers and manufacturers stated that cooperation is very important here.
However, the fact that it is more difficult to achieve the desired results is also shown by the clear difference in satisfaction with the initiatives in each sector. It is significantly lower in Supply Chain. 32% of those questioned are dissatisfied with the results of cooperations that have already been carried out in the area of inventory management. In contrast, the dissatisfaction rate for jointly planned product launches is only 17%. A lack of trust on both sides is the biggest brake on successful cooperation. For example, 66% of retail managers surveyed say suppliers are unwilling to share market research results with them. The analysis of the Booz & Company study results in clear recommendations for successful "shelf-oriented cooperation":
- Be pragmatic: Projects at the point of sale are well suited to achieve quickly visible success and to secure the necessary internal support for a cooperation.
- Managing expectations: The goals and expectations of those involved often differ from each other. They have to be carefully defined and shared in the early stages of cooperation. Manufacturers in particular have very high expectations that are often not met.
- Creating transparency: Both sides must jointly provide and share the necessary information and database. The same applies to data and results generated from the cooperation projects.
- Think strategically: Short-term success through increasing sales is important. In addition, long-term goals such as a differentiated positioning in the market or the optimization of supply chains in order to meet growing customer demands must not be lost sight of.
- Acting in an integrated manner: A successful project is just the beginning of systematic cooperation - in different regions, product categories or markets.
"The old rituals of negotiating listings and prices and the traditional fight for margin shares are counterproductive when it comes to winning and keeping customers. The market will punish those who are not able to react flexibly with strategic cooperations respond to changing consumer requirements," warns Heckmann.
About Booz & Company:
With more than 3300 employees in 58 offices on all continents, Booz & Company is one of the world's leading strategy consultancies. Clients include successful companies as well as governments and organizations. Our founder Edwin Booz formulated the basics of management consulting as early as 1914. Today we work closely with our clients around the world to master the challenges of global markets and create sustainable growth. To do this, we combine unique market knowledge and deep functional expertise with a practical approach. Our only goal: to create the decisive advantage for our clients at all times - Essential Advantage.
Information on the management magazine strategy+business can be found at www.strategy-business.com
Source: Munich [ Qm9veiAmIENvbXBhbnk= ]
