Why Retailers, CPG Manufacturers Must Collaborate To Grow

Recent speculation that retail leaders Kroger and Target are in early conversations about a merger has the retail and consumer goods sectors buzzing about what this means for how people buy and where they buy it. Coupled with announcements about several retailers closing their doors, Amazon purchasing Whole Foods and retailers like Aldi/Lidl entering the market, these shifts indicate that retailers are open to the strategic opportunities available to remain competitive and profitable.

However, these disruptions are adding to the already contentious relationship between retailer and consumer goods suppliers as demands for deeper discounts and other reactive stipulations are rolled out in the name of revenue sustainability. Both manufacturers and retailers are guilty of applying reactional tactics to try to stop the bleeding of difficult times. It is in this stalemate that the same prioritization of strategic decisions that retailers and manufacturers are executing individually to sustain growth are not being applied in a mutually beneficial collaborative approach.



Data is the currency of collaboration

Unlike in the past where retailers held valuable insight because they had all of the data, today’s manufacturers and retailers have access to more data points then they can readily interpret. As a result, opportunity exists for those who can interpret the data and translate this intelligence into revenue-driving actions. This is possible now more than ever with manufacturers investing in quantifiable post-event analytics and predictive planning technologies.

This prioritization allows companies to answer many of the questions that have hampered the partnership with retailers:

  • Are my promotions executing as agreed upon?
  • Are my promotions working?
  • How are my promotions impacting retailer profitability and category growth?
  • How is my promotional strategy with a retailer impacted by what the competition is doing?
  • What else can we be doing to improve results?
  • Why should my retail partners be open to this?

These questions once left up to “gut feelings” — and as a result rarely discussed — are now being answered and are central to the collaborative promotional strategy between retailers and manufacturers with a single, data-driven view of the truth serving as the catalyst. 

What-if? What else? Why not?

When retailers and manufacturers can harness data intelligence, the conversation shifts from speculative necessity to realistic possibility. Instead of being focused on tactics to capture temporary results, predictive analytics with constraint-based modeling can provide the quantified insight into the mutual impact of strategic pivots or new promotional approaches. Building the foundation of a collaborative, profit-driven trade promotion strategy will also open the door to a collaborative approach focused on optimizing the holistic marketing spend with the trade promotion investment to attain mutual category optimization.

There is no question that building the necessary bridges between retailer and manufacturer will be challenging, but the opportunity for companies that take this step to control the disruption instead of being a victim to it is already possible. The right combination of strategy, technology and true collaboration will separate the winners from the losers.

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