Q&A: Exploring the retailer-supplier relationship
Shopping behaviors during the pandemic, labor shortages, freight costs and much more have
turned the supply chain upside down, and it’s no doubt testing the relationships between retailers and own brand suppliers.
Store Brands spoke with James Butcher, CEO, S4RB, on the ways these two parties can better work together during a stressful time.
Store Brands: Describe the state of private label supplier and retailer relationships today.
James Butcher: I think it is fair for many to describe retailer-supplier relationships as “strained” after almost two years of supply chain disruption. The whole supply chain is still in recovery. Against a backdrop of a 13-year high for U.S. inflation and price concerns and “sticker shock” for families, discussions are focused on cost and availability. In many cases, this is at the expense of new products and innovation. More so than at any time in recent memory, retailers have had to put more effort into alternate supply, acting as a further barrier to innovation.
SB: What are some pain points you see in how retailers and store brand suppliers communicate?
JB: When you consider communication between retailers and suppliers, it is essential to think in terms of people rather than companies. Through our work helping retailers drive performance through supplier engagement, pre-pandemic, we would typically see over 15% churn in the retailer’s supplier contacts each year as people change roles, change companies, take parental leave, etc. Therefore, our approach puts at its heart maintaining an accurate list of supplier contacts for private brand retailers and automating this as much as possible.
The pandemic has accelerated both supplier company churn and supplier contact churn. This churn generates considerable noise, disruption, and inefficiencies that stop retailer private brand teams from focusing on the highest value tasks, resulting in successful, sustainable growth. The consequence is that retailers need to put even more effort into maintaining an engaged supplier audience. The risk of not doing so will result in retailers failing to tap into the wealth of experience of their supply base and the initiatives failing.
SB: Explain the “Consumer Experience Score” that S4RB and Consumer Science has partnered on.
JB: The value in the Consumer Experience Score reflects that products should not just be benchmarked on traditional value but on the value metrics specific to a particular brand. Sustainable and responsible business practices — whether that be green energy, efficient use of resources, protecting human rights, enhanced animal welfare standards — has never been more important for consumers. Therefore, private brand teams need to consider growth that cannot be from lower-cost volume as it drives over-consumption, which is likely unsustainable.
The Consumer Experience Score allows a product comparison based on brand values in a way that can help to drive a comparative competitive value across ranges and categories that enables retailers and suppliers to work more collaboratively as ‘one team’.
SB: What are some other tools or strategies that retailers can use to better communicate or engage with suppliers?
JB: At S4RB we talk about the three pillars of supplier engagement: communication, transparency and support. Too often, in my experience, retailers use just one or two of these in isolation. Whenever people align behind a shared message, a shared view of how they are performing, and an interest in getting better, great things happen for all parties involved.
SB: What are some things suppliers can do to improve how they communicate with retailers?
JB: We see suppliers who attempt to drive communications through a commercial account manager alone. We find this to be inefficient and ineffective. One key area where suppliers have just as much value to add as their retailer counterparts is sustainability.
There is no one-size-fits-all solution, and, as such, a huge amount of variation between brands, categories and even products will be required to implement appropriate sustainability solutions that don’t result in unintended negative impacts. This level of complexity is only impossible with supplier engagement at scale where the answers come from the suppliers themselves.