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How Partnerships Succeeding in Time of Friction

How Partnerships Succeeding in Time of Friction

These aren't the smoothest of times for retailer-supplier partnerships. Retailers are acting more forcefully to remake their merchandising strategies and in the process transforming how they work with manufacturer brands.

One of the biggest impacts has been the growth of private label and the subsequent reduction of brand market share. A related development is the retailers' push for SKU rationalization, partially a reaction to the proliferation of new products from brands. An SN story outlines in detail how this has played out.

These challenges are an important backdrop to this issue of SN, which focuses more on positive partnerships than tensions (coverage begins here). This is our second annual Category Excellence Awards issue, in which retailers recognize suppliers that are best meeting their needs. These achievements are all the more remarkable given the friction between trading partners just outlined.

In fact, a recent SN survey pointed up sharp differences in perspectives between manufacturers and retailers. When asked to name the most important initiatives for suppliers to focus on now, a total of 70% of retailers chose SKU reduction, compared with only about half of supplier respondents. Manufacturers placed higher priority than retailers on sustainability and new product innovation.

Moreover, when asked how the overall ability of suppliers to serve a retailers' needs has changed in the past year or two, trading partners differed sharply. Some 70% of suppliers said manufacturers have done a better job in meeting retailer needs, but only 30% of retailers agreed.

Despite these differences, retailers clearly notice when suppliers excel. That's the feedback we received in researching this year's award choices. Supplier winners were picked by our editors based heavily on feedback from retailers, who voted in a survey and participated in interviews. Other industry participants also provided input, and, importantly, the profiles of winners appearing throughout this issue point to the specific reasons that manufacturers were chosen. These include attributes such as in-store execution, strength of brand and assortment, shopper insights, collaboration, and marketing/promotions support.

These types of attributes distinguish suppliers in the eyes of retailers, who need lots of support. This comes across clearly in retailer comments.

“They're willing to do anything to create excitement and sales to the consumer,” said one retailer of Dole, pointing to a long-time partnership between the two companies.

Said another retailer about Anheuser-Busch InBev: The company “uses category management to provide sound recommendations that benefit the entire category.”

Here's how yet another retailer described its relationship with Nestle Purina Pet Care: “Its expertise and analytical support make it much easier to align both of our company's strategies.”

These and other comments point to robust relationships despite a tougher climate for trading partner alliances. Clearly, some top suppliers are succeeding in catering to retailers' more complex needs. The result is that both sides — and consumers — come out winners.

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