At the recently concluded Food Forum India 2010 in Mumbai, there were discussions held on retailer-supplier relationships based on issues such as retailer’s margin, in-store marketing, category expansion, shopper data sharing, etc. Many agreed on the need for mutual respect and trust, but are all concerned prepared to walk the talk?
Unlike last year’s (‘09) session, the panel discussion started with retailers demanding for higher margins. Supporting the fact that retailers today need more margins than what they are currently getting, Sunil Sanklecha, founder and managing partner, Nuts ‘N’ Spices, said, “When you talk about the margin part, at the cost of some industry, you cannot grow. If the retailers have to work on margins between five to nine percent in a modern retailtrade, it cannot survive.” Adding further he stated, “To be successful at the end of the day, it has to be a win-win situation for both retailers and suppliers.
”Both the retailer and supplier understand that it should be a win-win situation for both to survive in the industry, but the major question remains – how often do they meet each other after such discussions? And if the two are working together, why does the question of margin still arise?Some suppliers, however, point to the need for converting word to action on the ground. Amongthem is Saumil Thanawala, director (marketing) of Amalgam Speciality foods, which manufactures the Keya brand of speciality foods. “I see nosignificant improvement in real action; these discussions need to lead to real change.”
Category expansion and category management are some of the collaborative platforms where both retailers and suppliers need to work closely to create the consumption. Gurmeet Kaur Chadha, partner/consultant, The Partnering Group, says, “The combination of business conditions that exist today have created a need, as well as an enormous opportunity for innovative management approaches. The adoption of new ideas and approaches are high on the agenda of many leading retailers and suppliers.”
Chadha further adds, “Any retailer and manufacturer that truly desires to achieve a leadership position needs to adopt category management as a method of a ‘go to the market’ strategy. The key trends that are driving the emergence of category management are consumer changes and competitive pressures. This approach provides the vehicle to better understand and meet the needs of consumers, for retailers and manufacturers to collaborate moreintelligently, to gain more advantages from investment in information nd technology, to more logically allocate resources across categories and brands; and most importantly to achieve competitive advantage from the ability to attract, motivate and retain higher quality management talent.”
There are several examples of retailer-supplier collaborations leading to create new categories and manufacturers launching products which are designated for modern retail chain.
Quoting one such example, Komal Anand, vice president, modernretail, PepsiCo Group, said, “In PepsiCo, we have developed channel specific packs for modern and traditional retail trade. In the carbonated soft drinks segment, we have the 250ml pack, which is not sold at the traditional retail, it’s available only for modern retail chain. Also we have multi-packs, which is available in cans and in PT half litre. We have also imported packaging technology or this channel, which is not (yet) available for other channels.”
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