Retailers See Benefits of Increased Vendor Collaboration

Food retailers and their vendors are taking collaboration to a new level that both sides are hoping will drive results at the shelf, according to presenters at Information Resources Inc.'s Reinventing CPG & Retail Summit here last week. Kroger Co., for example, is deepening its collaborative efforts by working with a select group of manufacturers to reinvent the in-store experience.

ORLANDO, Fla. — Food retailers and their vendors are taking collaboration to a new level that both sides are hoping will drive results at the shelf, according to presenters at Information Resources Inc.'s Reinventing CPG & Retail Summit here last week.

Kroger Co., for example, is deepening its collaborative efforts by working with a select group of manufacturers to reinvent the in-store experience.

“This will be an important ongoing initiative,” said Ken Fenyo, vice president of customer loyalty at the Cincinnati-based retailer.

Fenyo didn't provide specifics, but said Kroger is aggressively looking to improve the shopper experience in various parts of the store, such as snacks and beauty care, by partnering with vendors.

“The CPG companies have insights that can help us go to the next level,” he said.

Fenyo spoke during a panel discussion on retailer-manufacturer collaboration. Other participating companies were Stop & Shop, Supervalu, Amazon.com [4], Anheuser-Busch, Campbell Soup and Kellogg Co.

Fenyo said Kroger is looking to manufacturers to help it not only get more customers into the store, but also meet the needs of its most loyal shoppers.

One way Amazon.com [4] is partnering with manufacturers is with a new program called Amazon Vine, in which 1,000 of its top customer reviewers can review products before they are released to retail. Unilever recently used it for the pre-release of its Degree Clinical Protection deodorant, said Tom Furphy, Amazon.com's CPG general manager.

“For a small investment, [Unilever] received a lot of buzz,” said Furphy.

Such efforts show that retailer-manufacturer collaboration is taking off, said Thom Blischok, IRI's consulting and innovation president.

“What's interesting is that the next few years will be the realization and implementation of the collaboration model,” he said.

IRI research found, however, that difficulties exist. Among them: Manufacturers are concerned that some retailers don't want to talk strategy — only trade deals — and don't want to share their long-term strategies.


Retailers, meanwhile, complain that manufacturers don't understand their customers and are only interested in growing their brands, not the categories, according to IRI.

The most successful manufacturers will be those that look to build a retailer's overall sales, not just theirs, said Stephen Vowles, Stop & Shop's marketing and corporate brands senior vice president.

“The manufacturers that are [collaborating] well are helping us identify the total customer picture, not just one product or one brand,” he said.

Likewise, retailers are most supportive of manufacturers that simplify consumer insights, said Jim Smits, Supervalu's fresh foods merchandising group vice president.

“Rather than a 60-page document filled with insights, they're coming with a two-page executive summary,” Smits said.

The heightened competitive environment in the food retailing industry is leading to changes for the better, said Don Johnson, Anheuser-Busch's national retail sales vice president.

“Our [retail] customer is doing a better job identifying who their true consumer is, communicating with us more often, and talking more about strategy,” he said. “It's much more a win-win collaboration, whereas historically it was a win-lose relationship.”

Mike Salzberg, Campbell's sales president, agreed. “Retailers have a better aptitude of our P&L as well as their P&L,” he said.