There's a lot of grunting and groaning, a lot of talking, but physically doing something they are finding a challenge." This is how Chris May, of leading customer management training company FXL, characterises relations between retailer buying teams and their supplier counterparts.
It's never going to be sweetness and light when a buyer sits down to talk shop with a major brand's account manager, but May's years of working with suppliers and retailers have shown him it's worse than you might think. "Put a supplier and a retailer in a room, they tend to be blokes, pumped up, full of testosterone and very blunt. It's a train crash waiting to happen".
But why should retailers alter what some believe is a bullying attitude, and why should suppliers stop "ringing and ringing and ringing"? In short, are things broken, and can they be fixed?
May says a more understanding culture would "raise the retailer's profile within the manufacturer". He says: "Currently 'retailer' is a dirty word - particularly the higher you go." He asserts that this would also result in "longer-term commitment from manufacturers - you rarely hear of a two-year plan for Sainsbury or Tesco for example".
He adds: "Retailers can't survive without certain manufacturers. There are countless examples where the buyer and supplier have fallen out, the supplier has been delisted, and the retailer has said 'actually we can't afford to carry on without them'. Eventually they have come back to the table, and in most instances the retailer's been worse off".
The two sides are "starting in a very different place", he says, and focus their energies "internally". However, points of difference are being continually eroded between retailers on price and range, and between suppliers in terms of their innovation and behaviour, says May. Retailers have to ensure they come out with a deal that works short-term at least, and suppliers have to work ever harder to persuade them. May believes it's time the two sides saw the bigger picture in terms of how their relationship affects the effectiveness of execution post-deal.
"I've done the analysis on NPD. These guys are arguing about 1% or 2% margin to get a listing - that could be, for example, £40,000 a month across the whole of grocery. Because the retailers are disorganised and not getting it into stores they're losing revenue equating to £400,000 a month."
In light of the fact that most product launches fail to reach their projected potential, the lack of any formal process for launching products between retailers and suppliers is a concern, says May.
He says a culture change is needed among buyers. "It's 'the more I bully you, the more I'm going to get from you'. Therefore it ends up very short term". May believes the major problem is a lack of relevant training: "No buyer I've met has been taught how to sell. If you can sell the benefit of working with your retailer to the key account manager, he or she is going to go back and say we should work better with that retailer." May says in his experience buyers "go to their default position, and use the bluntest tool in their box - price".
On the other hand, suppliers may not be sensitive enough to the needs of retailers. According to his firm's recent research, Colin Harper, MD of Storecheck Marketing, says buyers will "refuse proposals because they are often unconvincing...if they are biased towards brand performance rather than category performance".
Instore impracticality can also be a failing. Harper quoted one buyer: "They think we have elastic shelves and usually fail to propose delists".
Traditional training methods to try to alter buyer behaviour don't really work, says May, giving an example of a buyer he met at the retailer's head office. "The buyer announced he'd been on a four-day negotiation skills course, then he proceeded to make four cardinal errors within the first hour." Another problem is the high churn in buyer and supplier teams: "If an account manager leaves, or gets moved, nine times out of ten the business suffers. Average tenure for a buyer is about two years, and all the time and effort that's spent is down the drain".
But May is optimistic: "There is a massive opportunity here to get so much more". He thinks he has developed a way forward in a project he is running with one of his supplier clients (a big fmcg brand) and a major grocery retailer. This, he believes, could be an approach that either side can use; which would be transferrable so it would not depend on a particular buyer and account manager remaining in post in order to maintain fragile good relations. It came about when he met the supplier to discuss growing the category with that retailer.
The result was a meeting with four participants from either side. After a supplier presentation and a breakout session to identify merchandising opportunities, May says the two sides began stalling. He asked what their problem was and ten minutes later had a list of either side's opinion of the other (see box). The lessons from the meeting (and subsequent monthly reviews) are forming a "book" about this relationship, setting problems out frankly with a view to solving them. One outcome has been a Supplier Scorecard, being rolled out by the retailer, stating what's expected from suppliers.
May said once both sides had started being frank and honest and moved away from uncomfortable suspicion, "having got rid of the normal culture, the lights came on". What transpired was: "A really constructive discussion, where the retailers were shown some examples of merchandising from other sectors which they hadn't come across. One even said 'this is great, we never get time to go out to the stores, we're always stuck in HQ'."n
Case Study
At the meeting in March, both sides had the chance to say how they really felt about each other...
What don't retailers like about buyers and vice versa? There's a long list, but here is just a snatch of the feedback from March.
Supplier: "They wind me up - the bastard never rings me back."
Buyer: "They send me presentations that have so much detail they jam up my email. I have no idea why they send me them."
Supplier: "But you asked for them."
Buyer: "No I didn't."
Supplier: "But I do it every month for you, and it takes two days."
Buyer: "Why do you do it?"
Supplier: "Because I thought you wanted it".
Chris May: "OK, what would you, the buyer ideally want to receive?"
Buyer: "I want a one-pager that says 'issue, solution, recommendation'."
May: "Have you ever told him that?"
Buyer: "No. He's never asked me."
May: "Why haven't you asked him?"
Supplier: "Dunno. Good point".
MB&R is working with Chris May on an extension of this project to bring retailers and buyers together. To register your interest in attending the next meeting, please contact the editor, James Parker, at james.parker@william-reed.co.uk
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