EAST WENATCHEE, Wash. -- A majority of retailers say retail consolidation, item proliferation and increasing financial performance pressures are compelling them to seek more than just products from their suppliers, according to new surveys conducted by The Perishables Group.
The polls of 39 retailers around the country -- representing nearly 60% of the total U.S. retail volume -- found there is a large gap between the expectations most retailers have today and what they actually get.
"Every single retailer surveyed said they could use more information on who is buying their products," said Steve Lutz, executive vice president of The Perishables Group. "Only 19% say they get it."
Seventy-five percent want more help with category reviews and planning. Of the 20% who say they get such help, many get their information from trade and lobbying groups, Lutz said.
"As retailers consolidate, their needs are evolving," he told SN. "On the supply side, we're still playing catch-up."
In the future, most successful suppliers will have to offer more than just high-quality products, Lutz said. "If all they are offering is a good product, it won't be enough. There's no end of high-quality product out there."
While the needs of their retail customers have been changing, most suppliers have been slow to react, he said.
"We have only had the opportunity to get good information for the past five years or so" with the advent of price lookup stickers and other technology, Lutz added. "It seems a lot of supply-side organizations haven't caught on or developed their internal resources to provide this information to customers."
On the other hand, a dozen or so vendors "excel" at providing retailers with category management services, Lutz said. Most are branded vendors, though an increasing number of commodity trade organizations are taking on the role of "category captains."
Retailers are looking for a "consistent set of activities," Lutz said. They include category reviews (77%) and category planning (76%), which only 15% say they get, and competitive data (73%), which only 3% say they receive from suppliers.
The polls revealed differing perceptions as to what the other wants, as well. For example, incentive promotions, which many suppliers believe are essential, were not considered vital by retailers interviewed for these surveys in the last quarter of 2000. As many as 61% described incentive promotions as either unimportant or unwanted. Researchers say they believe it is possible that trade incentives have been widely available for so long that they are taken for granted.
Promotional support is another readily available service, which 45% of retailers said they want and another 42% say they already receive. However, a total of 55% of those surveyed say they don't want promotional support as it is now offered. Supply-chain cost data shows an even split among retailers. Half listed the service as a priority for their suppliers to provide while the other half did not list it as a priority at all.
Market intelligence and competitive data were cited as a priority for 74% of retailers and only 3% report that their suppliers provide this service. Up to 77% of retailers said they want some level of category review support. Only 10% say they receive this support from suppliers, while roughly 25% say this service is not a priority.
Fifty-seven percent of retailers report they want help from suppliers with developing retail advertising plans, while 36% said it is not a priority and only 30% say they receive such help. The retailers interviewed by The Perishables Group represent a cross section of the U.S. supermarket business, and their preferences for services do not fall into any predictable pattern by type, Lutz explained.
"Suppliers must look hard at the customers they're selling to and see what the source of their competitive advantage is," Lutz said. "They had better assess who they sell to and what the set of services are that they can add to make the relationship deeper with their retail partner."
The secret is to keep examining the needs of the customer, make use of the technology available and deepen the alignment, Lutz said.
If consumer information and total category management services are the wave of the future, they're not for everyone, Lutz warned. "Between 25% and 30% of retailers don't want it, because they haven't changed their business model. If that's your customer -- no problem. Your old relationship is OK while it works."