“How do we develop and maintain higher level strategic partnerships?”
That was the theme of the recent Drug Store Industry Issues Summit in New York in December. Once a year, senior retail and manufacturing leaders get together to review the ever changing dynamics around how we create value for each other while satisfying the needs of the shopper. The summit focused on strategies for elevating retailer and manufacturer relationships, and the three stumbling blocks that hinder growth including:
- Almost half of all retailers and manufacturers don’t believe their partnerships are as deep as they would like.
- Only 1/3 of all manufacturers believe risk is being jointly shared with their retail partners. And half of retailers believe their manufacturing partners are assuming enough risk.
- Only 1/3 of both retailers and manufacturers believe they are being as transparent as they could be?
If the goals are truly aligned, why is there seemingly too much lack of alignment vs. being focused on achieving mutual outcomes?
Makes me wonder if we all truly understand each other’s interests, and are we aligned.
The following are five big ideas that came out loud and clear during the panel discussion. Let‘s see how you are doing.
Idea #1: Launch Real Innovation: To quote one senior retail executive “most new item launches have supposedly earned 2-box consumer acceptance based on prelaunch testing, but very few ever deliver on the promise.” Real innovation fills a whitespace and is supported by your unique intellectual properties and validated with real insights that minimize risk. Setting the right financial expectations, supported with a robust 2-year marketing plan and an upfront exit strategy is the best practice in designing a new item launch plan. Do you dare being that committed?
Idea #2: Relevant Insights: Top retail executives are looking for new knowledge that helps them optimize their category, support changing consumer needs and brand their store. Some of the best and most valuable “cutting edge” insights include emerging international trends or ethnographic knowledge on how their consumer utilizes products within the home. The ethnographer lives among the people (in their home), studying their habits, lifestyles, challenges while remaining objective. This research allows you to go deeper, becoming more valuable in the eyes of the retailer.
Idea #3: What’s Next? All retailers shared that they want their partners to help them understand and design products which support the shopper’s changing needs. In other words, they are looking to better understand “what’s next?” Top retail executives want to partner with manufacturers that harness the knowledge within their broader company, and uncover new ideas bubbling up on the fringe of the market on in other countries. It was clear that the panel is tired of hearing the same ole generic insights. The best practice is to only share information or trends they are currently not aware of, allowing them to create the future. Retail executives are also hungry for insights on how to build stronger relationships with their core customers, Hispanics and the growing Millennial Consumer.
Idea #4: Joint Business Planning (JBP): The most important Joint Business Planning philosophy is to align the planning process around vision and values, while centering on shared expectations and goals. When retailer & manufacturer think like one company, they drive mutual accountability, facilitate disruptive innovation and all departments (sales – marketing – supply chain – merchandising) are involved in the development and score carding of the business.
Transactional business planning is a waste of everyone’s time. The best planning engagements are about solving unique category problems or creating a best in class shopping experience with the retailer’s core consumer. It is time to think different!
Idea #5: Ruthless Trust: Always look to seek the ruthless truth about how you are perceived and valued by your retail partners. The key message from our retail panel was to “have the guts to share what your expectations are and to honestly push back if you believe you are not in a win/win partnership.”
Philosophically, retailers are looking for manufacturers who are objective and category agnostic, who partner on research, uncover unmet needs while looking for gaps with the guest.
When relationships, new item launches or promotional events breakdown, both retailer and manufacturer must ask two questions:
- “Why didn’t our plan work?”
- “How was the shopper negatively affected?”
Our esteemed retail panel was very clear about expectations. They are looking for real innovation, emerging insights, a peak around the corner (or what’s next?), higher level joint business planning addressing new ideas and ruthless trust from their manufacturer partners.
Let the seller beware!
Dan Mack is founder of the Mack Elevation Forum and a partner in The Swanson Group. For more insights on Dan Mack and the Elevation Forum go to www.mackelevationforum.com. To learn about his first book Dark Horse: How Challenger Companies Rise to Prominence visit www.darkhorsebook.com