Developing the right relationship with your retail customers is one of the most important functions in your business. There are not many retailers so you need to put the resources into developing a solid relationship that will serve you well throughout the year. The category managers are key decision makers and they have a support group who do a lot work and have a significant impact on your products.

Make an effort to get to know the entire group

Retailers have their own unique structure, which you should understand from top to bottom. Your category manager has a support team to ensure the merchandising plans are created and implemented, data integrity is maintained, items are priced properly and that inventory is flowing through the system efficiently.

Most retailers have category assistants. They are the people who create merchandising plans for regular programs and they have influence over selection of inside ad items. They also work with suppliers and in some cases attend meetings with suppliers. These are important people to know. They attend fewer meetings than category managers and you are more likely to get them on the phone if you have a time sensitive issue. Help them understand the industry and the category and get to know them like a category manager. You never know, they might be your next category manager!

Other people who influence your items and your business

Beyond the category manager and the assistant category manager there are usually people who do pricing, reporting and work more with data integrity. You should take advantage of every opportunity you have to meet these people. If there is an issue with your item for pricing, data integrity or a plan-o-gram you want them to call you. If they know you, they are more likely to send the email or pick up the phone. These are issues you want to discuss before they impact shelf conditions at the store or miss the break of an ad. Make sure they know your items and how to contact you.

Produce is one of the most challenging categories to manage data integrity. Items come from different countries and have different pack sizes, different UPC codes and case packs. These all have to be set up correctly in your customer’s system to ensure smooth transition from one growing region to another. Work with the merchandising team to ensure your items are set up correctly. This will also have a positive impact on your accounts receivable. Most of the retailers use integrated systems so the correct vendor and item set-up will translate into invoices flowing through properly.

Supply chains are key in your success

Most retailers separate the category management function from the buying function. The buyers are focused on inventory management and they are told who to buy from at what cost. They do not negotiate costs and they are buying multiple items and categories so their information is usually coming from the retailer’s system. The buyer’s role is a junior one, but it is very important to the success of suppliers. Develop the relationship with buyers and when it is appropriate, give them some guidance. Each retailer has different expectations for suppliers in this area. Walmart expects suppliers to understand the category as well as they do, and they provide tools for you to do this.

In produce where there is a lot of seasonality, you should really watch purchase orders and if the buyer is inexperienced, provide guidance. This is not about calling to get more cases on an order. If you try this, your line of communication will be cut short. If you provide guidance that is best for you and the retailer, whether it is adding or subtracting from purchase orders, you will develop a relationship. Try forecasting your sales to the retailer and see how close purchase orders are. Often with a new buyer you have to help them understand lead times and if you are in a region you need to explain geography.           

Buyers do not decide your fate but they can influence it.

Organization charts are good tools

I suggest people keep an up-to-date organization chart for their customers. These are complicated organizations and you should track your relationship with each individual. Make notes and challenge the people in your organization to develop relationships with the people in the entire category management team and the supply chain team. As I said last month, you have to remember to negotiate with the category manager and keep pricing, merchandising and volume discussions with them. With this philosophy you should develop strong relationships with your customers that will benefit you and your business.

If you have developed relationships with the entire merchandising group or if you have any questions you can contact me at pchapman@gpsbusiness.ca.

RETAIL NEWS

Relationships between retailers and suppliers have been in the news a lot recently. The Competition Bureau in Canada has been investigating the practices of Loblaw and other retailers. This is a complex issue that can have a significant impact to both parties in the relationship. Recently Loblaw sent a letter to suppliers outlining changes to be implemented for 2016.

They are making changes for different reasons. Loblaw wants to make the process more efficient which is encouraging. A lot of time and resources have been spent to negotiate the retroactive pricing demands. This practice also puts a great strain on the relationship. This is a chance for Loblaw and the suppliers to become more efficient. Another reason they are making changes is that there are opportunities for suppliers in the market. Loblaw has a strong position in each region, however suppliers do have choice. To remain competitive Loblaw must have good relationships with suppliers where they will get the opportunities on new or seasonal items. Suppliers do have choice and they can influence consumers with great new items or promotions in certain retailers. This is more of a grocery issue however it does impact other departments.  

For more information, check out this article from the Globe and Mail’s Marina Strauss where I was quoted on the issue. http://ow.ly/TdeTp                     

WHAT’S IN STORE

Walmart turkeys

Earlier in the year Walmart advertised turkeys for $0.77/lb, which was an incredibly low price. When I visited the stores there were people struggling to get all the turkeys into their carts and out the door. Consumers would probably remember the price because they perceived it as a great deal.           

One of the challenges when a retailer really goes below the market retail is what to do next time. I found their pricing strategy for Thanksgiving very interesting.  They used a fixed price in three different size categories as opposed to a fixed price per pound.