Vantage Point: What is Different with Retailer-Supplier Collaboration this Time?

By: Graeme McVie, Senior Vice President, APT

Serious efforts at collaboration are gaining credence and driving action across the retail consumer products industry. The desire to better serve the end shopper provides a unifying goal for both trading partners, which shifts retailers away from their category-centric view and manufacturers away from their brand-centric view. Furthermore, new and better data and analytic methods are now available to better facilitate shopper-centric collaboration efforts.

Collaboration between retailers and manufacturers has been a goal for many years in the retail consumer products industry. This goal was driven in large part by the belief that closer collaboration would enable better performance. In a number of ways collaboration has been successful: improvements in supply chain efficiencies are a prime example. But when it's come to marketing and merchandising, collaboration has not delivered on the promise that so many believe it has.

Traditionally, retailers have been appropriately focused on optimizing the performance of their product categories, while CPG manufacturers were focused on the performance of their brands. This is the legacy of two business systems that have served the industry well for many years -- Category Management and Brand Management.

While retailers and manufacturers share the goal of selling more products to more consumers, more profitably, the dissimilar orientations of these two systems have sometimes led to misaligned and even adversarial trade relations, circumstances widely recognized as detrimental to business success.

But in recent times, collaboration has been evolving to make an increasingly material difference in merchandising and marketing at the retail level. This article discusses the role of transparency in establishing assurance and trust between trading partners, and describes the benefits of advanced analytics shared over a secure platform and delivered via Software-as-a-Service solutions. Shared data are essential to collaboration, but shared analytical approaches are a means to the greater assurance and trust that can truly deliver on the promise of shopper-centric collaboration.

Shopper-Centric Sharing

The common denominator of the shared end customer, or shopper, provides a unifying collaboration point for both retailers and manufacturers. The recent phenomenon of Shopper Marketing has brought with it an ongoing search for actionable insights which provides common purpose for retailers and manufacturers in their joint pursuit of high-value shoppers and share of wallet.

In shopper-centric merchandising and marketing, information transparency helps provide assurance which can lead to trust. But information transparency must go beyond shared data and shared insights -- it means revealing the analytic path to those insights.

A common data and analytical platform that is delivered via transparent Software-as-a-Service solutions enhances collaboration in three key ways:

   1) It removes confusion
   2) It reduces contention
   3) It provides a basis for greater trust

A shared data and analytical platform allows manufacturers to gain access to valuable data and more refined insights while allowing retailers to realize more fully the value of the asset that resides in their data. This shared process also enables retailers to leverage the analytical resources in the manufacturer's organization and aligns finite resources to be jointly focused on the most valuable tasks.

Collaboration is Evolving

Retailer-manufacturer interactions used to be focused mainly on buying, supply chain efficiencies, and space planning, but was then widened to cover all four merchandising P's: Price, Promotion, Product, and Placement. The availability of transaction-level shopper loyalty and behavior data brings new potential, which is being unlocked by some industry leaders and creating greater collaboration around marketing and merchandising programs. The retail consumer products industry is recognizing the need to collaborate around shopper analytics in a way that delivers consistent insights and reliably measures outcomes of specific multi-dimensional shopper-centric programs.

Until quite recently, retailers were very protective of their weekly POS, frequent shopper and transactional data. As a result, much of the value of that data remained locked within data warehouses. To foster greater collaboration, a number of leading retailers have started sharing increasingly granular levels of sales data directly with some key manufacturers. Some prime examples include: Wal-Mart's RetailLink program and Walgreen's data-sharing program for vendors.

With shopper-centric innovation rapidly increasing, collaboration opportunities are only going to multiply. Shopper-centric innovation is in evidence along multiple dimensions across retailing and CPG manufacturing, and each dimension would benefit from closer collaboration:

-SKU rationalization
-Re-inventing the in-store shopping experience
-Shopper marketing programs
-In-store media and events
-Online advertising

In addition, the tools are now available to enable greater collaboration. These tools are available via secure Software-as-a-Service solutions that provide retailers and manufacturers with transparency and objectivity when accurately and rapidly evaluating shopper-centric programs. These shopper-centric programs can then be evaluated on an apples-to-apples basis, allowing retailers and manufacturers to focus on why shoppers responded in the way they did and what to do next. They also allow retailers and manufacturers to understand in which situations each program performed well and less well and what factors drove the differentiated performance, allowing programs to be further refined and targeted to the shoppers that responded best.

Collaboration is being driven by the desire to better meet shopper needs and the requirement to more rapidly deliver innovative solutions that satisfy these needs. Leading retailers and manufacturers are already reaping some of the benefits that come from better collaboration, but greater value can be captured with the right approaches and tools.

A combination of trusted data, trusted tools, trusted process and trusted partners, enabled and reinforced by evidence of transparency, enables retailers and manufacturers to focus on using insights to make better shopper-centric decisions, rather than debating the validity of data or analytical processes. This potent combination has the potential to truly unlock the value of collaboration.

APT provides analytical, user-friendly SaaS solutions that assimilate data from various sources in a centralized data repository. APT's advanced analytical engine sits on top of the data repository, and APT's intuitive software applications allow users to interact with the intelligence in the APT data and analytical platform. APT's Testing Management System supports the full Test & Learn process and provides the keys to success for rapidly evaluating and optimizing collaborative shopper-centric initiatives.


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About the Author
Graeme McVie is a senior vice president at Applied Predictive Technologies (APT). In this role, he leads engagements across a range of APT clients, including consumer goods manufacturers, supermarkets and specialty retailers. He is also responsible for building APT's partnerships and strategic alliances.