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Regional Retailers Seek Improved Trade Partnerships

Regional Retailers Seek Improved Trade Partnerships

COLORADO SPRINGS Regional independent retailers are seeking enhanced relationships with trading partners and they have definite ideas on how to make that happen. Collaboration with partners was the focus of comments by top executives of Schnuck Markets and Hy-Vee during a session at last week's Grocery Manufacturers Association Executive Conference here. Schnucks has improved its business strategies

COLORADO SPRINGS — Regional independent retailers are seeking enhanced relationships with trading partners — and they have definite ideas on how to make that happen.

Collaboration with partners was the focus of comments by top executives of Schnuck Markets and Hy-Vee Food Stores during a session at last week's Grocery Manufacturers Association Executive Conference here.

Schnucks has improved its business strategies and is urging suppliers to raise their games in working with the regional chain, said Scott Schnuck, chairman and chief executive officer of the St. Louis-based retailer. “We've taken steps to get our house in order, and I'd encourage you to make sure you're getting your house in order in how you come to us to work together,” he told the supplier-heavy audience.

Schnuck said his company has revamped its category management ranks, created a merchandising analytics center, invested in technology and attempted to benefit from studying customer segmentation.

He said regional distributors like Schnucks don't always get the same attention from trading partners as national retail chains. He cited turnover in the ranks of manufacturer teams calling on Schnucks, which “impedes collaboration because we have to train new manufacturers' sales reps on our business.”

“My request to our vendor partners is that when you come to call on Schnucks that you have smart people who know the business so we can get to collaborative efforts and strategic partnerships.”

Schnuck is co-chair of the Trading Partner Alliance of GMA and Food Marketing Institute.

Randy Edeker, president, Hy-Vee, West Des Moines, Iowa, said his company has changed its business practices to help accelerate collaborative efforts.

“We recognize the need to change how we go to business,” he said. “We're very decentralized so collaboration at times can be challenging when you're calling on so many folks [at Hy-Vee] to implement it,” he said. “So we've had to adapt and change to be an effective partner. We're maintaining an 85-year-old culture that we think has been very successful, but we're adapting to new practices and integrating those together.”

He outlined strategies that can enhance trading partner collaboration, such as broadening the types of executives involved in partner discussions.

“Be inclusive in who comes to these meetings,” he said. “It's no longer just for operations folks. It should now include IT, procurement, distribution, marketing and even HR. It has to filter down to all levels.”

He also advised that partners be discerning in choosing which collaborations to pursue.

“There are a lot of opportunities and needs, but you can't take on all those efforts,” he said. “Look for strategic alliances. Collaborate around where you want your company to go.”

Donald Knauss, chairman and CEO, The Clorox Co., said there are three recurring themes about collaboration that his team hears from retailers.

“First, collaboration better grow the category; it's not just about growing the manufacturer's share,” said Knauss, who is the other co-chair of the TPA. “Second, retailers want products that will bring excitement to stores and differentiate them. Third, they want help in continuing to take waste out of the supply chain.

“We try to listen very hard since we're not the biggest guy on the block.”

The GMA panel was tied to research about collaboration by McKinsey & Co. that was first unveiled at last year's conference and expanded on this time.

Among the findings:

  • • 83% of companies are engaged in collaboration, but only 20% of collaborations are “high-impact,” meaning that they deliver significant value.

  • • Collaborations often fail because of non-compatible partner goals and conflicting incentives, among other reasons.

  • • Collaboration amounts to a $10 billion opportunity for the industry as a whole, based on McKinsey's analysis of potential gains.

  • • Six “high-value opportunities” were identified, ranging from delivering revenue growth to cost reduction.