Four points to consider when collaborating in grocery retail

However at last year’s IGD Category Management and Shopper Marketing conference, I saw a distinct inclination from both parties to unlock sustainable ways of working together and leverage customer insight throughout the category management process. Collaboration in grocery retail is often bandied about ambiguously. Any interaction (big or small) has historically been labeled as being “collaborative.”

More often than not what has been happening is transactional in nature, not necessarily reflecting an alignment of organizational objectives and goals to drive category development and performance. Two major barriers to true collaboration are trust and visibility in a category partnership. Whether that be revealing future strategy, existing insight or competitive advantages, the need for visibility within the relationship is critical.

Historically, retailers would assign category captain status to a supplier to help leverage their category knowledge, resources and customer insight. Often this would be the leader in that category and having that status would give a perceived competitive advantage for the manufacturer, who would be more privy to the future plans of the retailer and likely be able to easily influence assortment and space recommendations.

However, as retailers search for a more holistic view of their customers to understand opportunities for growth, they have broadened their reach by involving more manufacturers in their planning of a category. Lee Mountain, from Asda, shared that by listening to advice from a range of suppliers (big and small) his category managers can take a more objective approach to categories with a higher likelihood of success, creating an “open-loop communication between retailers and CPGs is essential to delivering successful collaboration.” This should not be done just between traditional contacts. In fact, as David Warren (Orchestral Teams) communicated, for teams to collaborate effectively they must be set up like a finely tuned orchestra.

2. UK retailers and manufacturers have a common enemy

The need to collaborate was brought into focus with the ever looming Brexit, discussed by Chief Economist at IGD, James Walton. He included significant insight into predictions on how the UK market will likely perform and the importance for retailers and manufacturers to collectively re-engineer the supply chain to drive efficiency, with the help of category management to collectively guard against the possible outcomes of Brexit.

3. It doesn’t have to be “us and them”

A key finding in the 2016 Category Management survey was that retailers and manufacturers were divided on assortment priorities. Results suggested that retailers preferred to focus on category innovation (as highlighted in the slide from Sainsbury’s – right) through new product development, rationalization and planogram design, while CPG manufacturers wanted to do better with existing products through more effective distribution and range gaps.

What became apparent at the IGD event was that breaking down the “us and them” mentality that has plagued category management for many years was a critical factor to successful collaboration. Rob Owen (Unilever) offered ideas for working smarter with retailer accounts, “don’t present finished ideas to retailers, tease and inspire, trigger the willingness to co-operate.”

4. For the many, not the few

During one of the very valuable panel sessions, a question came from the audience about how different sized manufacturers can work more closely with retailers. The consensus pointed towards manufacturers not trying to be all things to all retailers. In particular, CPGs are better to focus time, money and resources on specific areas that will drive value to their partners.

Jeremy Peters from Premier Foods addressed a jam-packed room on how their approach to collaborating with retailers enabled them to punch above their weight. Utilizing VR to put category recommendations in the context of the overall aisle and store, Premier Foods maximizes shelf standout and work with their retailers to build customer-relevant category propositions. Whilst technologies like this are not a silver bullet, they are a critical enabler to build on and grow existing collaborative relationships. This has also been reflected in the approach by Asahi, who have driven a 2.5% increase in sales by creating “theatre” showcase fixtures tailored to retailers and the needs of their customers.

All in all, an excellent event with nearly 300 retailing practitioners delivering insights into how you can change your approach to category management in the context of your retailer and supplier relationships in order to build shared initiatives that deliver mutual opportunities for category growth.

Symphony RetailAI will be hosting its Xcelerate Retail Forum in Boston, 2-4 October. We will be continuing this thread of customer centric category management and how best to put customer insight at the heart of your decision making.