Collaboration with Suppliers for Assortment Optimization – Part 2

The most impactful information a retailer can share to its suppliers is loyalty data which gives true customer insight into the behaviour, purchasing patterns and demographics of the supplier’s brands and the impact of promotions and innovations. Loyalty data is a brand manager’s dream and a retailer can leverage that to build category share and larger baskets. It’s also no secret that the most loyal shoppers, those that represent sixty to seventy percent of a retailer’s sales, only spend fifty to sixty percent of their dollar with that retailer. Loyalty data and loyalty analytics allows retailer and supplier to work on strategic and tactical efforts to make your ‘loyals’ more loyal.

Suppliers also have a gold mine of insight that they can share to retailers.  Large marketing research investment is made to understand what consumers think of categories and how they shop them.  Procter & Gamble famously visits consumers at their house to observe how they interact with the product.  These vendors are able to supply data-based consumer decision trees that can guide the level of assortment needed for each key segment in a category ( category-management ).  Vendors will also perform shop-along surveys to learn what shoppers think of a retailer’s merchandising and prices and how decisions are made.  Importantly, suppliers can bring key market performance data from syndicated scan data providers to determine assortment recommendations.  Panel data can be used to share key metrics like shopper conversion, the number of shoppers in your store that purchased the category, and benchmark that to other retailers.  The best vendors bring invaluable consumer insight to the table and with that, a pipeline of innovation that capitalizes on these insights.

Joint execution on key programs can also pay dividends for both parties.  Vendors often tap into licenses or unique insight to bring differentiated programs to the trade.  A genius marketing idea is about as good as a terrible one if it fails to be executed in store effectively.  Vendors want to partner with retailers that can ensure store level execution.  It is key for them to get speed to market on innovation and ensure displays are available during peak demand.  Similarly, retailers need programs provided to them that meet the needs of their shoppers and match their strategies.  Cookie cutter programs are far less likely to inspire commitment and execution.

With the aim of satisfying consumers and the sharing of unbiased insights, strategic partnerships between retailers and suppliers have proven to deliver superior returns.  Take the time to ask yourself, what you can share with your suppliers to make them more effective and press your suppliers for greater insight.