In the drive to optimise sales, suppliers need to work more closely with independent and specialist retailers, treating them as marketing outlets as well as sales outlets.
In the case of smaller rtailers, if suppliers simply regard the shop as a sales outlet, its profitability (for the supplier) will determine the degree of attention it receives from the supplier. This can make the minimum order requirement excessive for the retailer.
However, extending the definition of the shop to marketing-outlet reduces the pressure on the bottom line. In other words, some of the cost of servicing can be written against the marketing budget.
In order for both parties to want to optimise the potential joint-opportunities that a fundamental change of this magnitude represents, it is crucial that they each understand and integrate the consumer marketing and retailer marketing programmes of their trading partners.
A Fundamental Conflict of Interest
Despite improved collaboration between suppliers and the mults, it is important to acknowledge potential conflicts of interest between suppliers and smaller retailers.
The retailer wants the consumer to shop in his store, and is less interested in what product is purchased, whilst the supplier wants to sell his product, irrespective of where it is purchased.
Whilst the major multiples are sufficiently powerful to insist that their agendas drive joint business planning, it is especially important in the case of independent and specialist retailing that these potential conflicts of interest are resolved by a joint-understanding of the consumption-shopping process.
Essentially, this means recognising that consumers have two need-sets or appetites, consumption needs and shopping needs, that have to be satisfied in-store.
Consumption Needs
As consumers they are looking for Product performance (delivers to, or even exceeds expectation), Quality/reliability related to cost (such as premium vs. budget brands), Brand name (popular, well-known, respected product, consistent delivery), Value for money (perceived gain vs. price paid in other retailers, channels, or online), Status (peer-group respect), Pride (in owning latest version), Imitation (either doing what others do, or leading others), Possession (something for nothing, i.e. gift with purchase, BOGOF), Sense of duty (buying on behalf of other person as gift), Security (avoiding fear, such as counterfeit brands, or wasting money).
For suppliers this means understanding how their target consumers behave as shoppers in different channels and retail formats. They then need to use this insight to develop shopper-based strategies that will grow categories to the benefit of products, consumers, retailers and shoppers.
It can thus be seen that suppliers face a very complex challenge in influencing and managing consumers’ consumption needs, all wasted unless shopping needs are effectively addressed.
Shopping Needs
As shoppers, consumers are looking for Choice, Availability, Price, Convenience, Opening hours, Atmosphere, Display, and opportunities for Impulse purchase, all wasted unless the product performs to expectations. Moreover, it is vital that, following purchase, the contents exceed the expectation created by the on-tin description…
This need to satisfy shopper and consumer appetites simultaneously means that suppliers and retailers have a high degree of mutual dependency, particularly in independent retail.
Traditionally, suppliers focused upon satisfying the consumer’s consumption needs, leaving the retailer to meet the consumer’s shopping needs. However, in the current economic climate, state-of-art suppliers and retailers can achieve more by understanding and influencing consumption and shopping needs.
The Need for Collaboration
In practice this means independent and specialist retailers can excel by understanding more about the consumption process. This means that suppliers should prioritise and actively partner with those retailers that have a high proportion of the target consumer in their store traffic. They should collaborate with partner-retailers in order to produce an in-store environment that is conducive to maximising the basket-size of every store-visit by the consumer, via effective satisfaction of their shopping needs. In the case of independent and specialist retail, in-store theatre can play a uniquely intimate and effective role in a way that the supermarkets can never match, given their scale.
Major retailers will have their own marketing agendas, making it more difficult for suppliers to influence the retailer’s in-store management of their target consumer. This may possibly result in some compromising of the consumption marketing programme, in-store.
On the other hand, it is obvious that the supplier can exert more influence within the independent and specialist retail environment. Here the retailer can need help in evolving a consistent marketing mix, and because of their scale purchasing of in-store promotional materials, suppliers can afford to provide and manage point-of-sale display materials that precisely match the needs of the product and can elevate the quality of in-store theatre at outlet level, in return for total compliance by the retailer.
This degree of consistent execution of a supplier’s product marketing message, tailored to outlet needs, across most of the independent and specialist retail sector cannot but benefit both parties in terms of profitable satisfaction of consumer need.
All else is detail....
