We know the relationship between suppliers and retailers can be a challenge. Although both parties want to sell more food, they do not often agree on the price, timing and methods to generate those sales.
Unfortunately, animosity can get in the way of improving the relationship. There is no doubt the pandemic has brought new challenges to producing and selling food. Input costs are rising, it is a challenge to find labour and efficiencies are difficult with new regulations.
However, this is a time when there are opportunities to improve the relationship. If you take a look at the challenges in your own business, you can develop an appreciation for some of the challenges retailers are facing. Likely they are dealing with similar issues in their business.
Input costs are rising
When the price of fuel increases, it impacts your business. Your customers have many trucks on the road and if you deliver to the warehouse some of these trucks carry your product to the market. Packaging costs are increasing in your business and there is a lot of pressure to shift to more sustainable options. Retailers use huge amounts of packaging in some departments such as bakery and meat so their costs are increasing as well. They are also expected to reduce their impact on the environment.
Improving the relationship can be as simple as recognizing the other person’s challenges. When you talk to your category manager, discuss the input costs in your business and ask them about their business. If they agree packaging has increased 20 per cent in bakery, then it is also more difficult to argue with you about your increase. You can also enquire if category margins are likely to change. You do not have to like the change, but you do need to know about it.
Labour is a challenge
There are two issues we hear about with regards to labour: how difficult it is to get people and when you do find them, they might not have the skills you need. This is also true for retailers. It has led to self-checkout in many stores and process improvements where they ship products from the warehouse by aisle so the store employees will be able to get the stock on the shelf. Retailers are also using robots to check inventory in categories. Once the robot looks at the shelf, it prints a list for a store employee to find the stock. Retailers are challenged to find people to work in many parts of their business.
If you see your customer struggling to buy properly, they might be having a difficult time filling positions with qualified people. If this is happening, watch your purchase orders carefully and you might even need to suggest orders. An inexperienced buyer can have a serious impact on your business. By looking at your forecasts and helping them keep the right amount of inventory on hand, you are protecting your own sales and giving them support.
Efficiencies are difficult with new regulations
You have likely had to operate your business very differently since the start of the pandemic. Your plant might not be as efficient and your office staff are working remotely. We have all been in the stores to see the changes they have made. Your customers have also had to implement a lot of new practices in their distribution centres and many of their people are working remotely as well.
Learn the technology and develop virtual relationships with your category managers and buyers. It is actually easier to get time with them right now as they are not in marathon meetings at the office. Plan shorter, more frequent communication. Figure out how to get the product samples to them effectively and grow your sales.
Look in the mirror to understand your customer
Despite the animosity that can exist, you can learn about your customer when you think about what is happening in your business. Both companies are in business in the same market so the challenges are likely similar. Yes, the big retailers have some advantages in terms of economies of scale and purchasing power, but they also face some of the same issues your business does.
We are coming into the critical fourth quarter where sales on many items are much higher than other times of the year. It is a great time to consider what your customer is going through and take the opportunity to improve the relationship with the end goal being for you both to sell more.