5 Tips to Improve CPG and Retailer Collaboration

Are you disappointed with how your brand is performing in retail stores? Do you ever feel like you and your retail partners aren’t on the same page?

If you find yourself nodding your head to those questions, perhaps your retail strategy is missing an important component: collaboration.

When CPG companies and retailers form collaborative partnerships, they reap the benefits of lower costs, a better shopping experience for the customer, and higher revenues.

According to Accenture, “Successful collaborators can generate 2 to 10 percent in operating margin improvements. Collaboration efforts can raise store-shelf stock rates by 5 to 8 percent, reduce inventories by an average of 10 percent and cut logistics cost by 3 to 4 percent for retailers, while yielding a 5 to 15 percent reduction in manufacturing costs and a 3 to 10 percent reduction in General & Administrative (G&A) costs for suppliers.”

Clearly, forming collaborative relationships pays off in the retail and CPG space, which is why brands should make every effort to foster teamwork and collaboration with their retail partners.

Here are five tips to help CPG brands accomplish collaboration with retailers.

Tip #1: Collaborate in the planning stage and establish shared goals

Instead of approaching retailers when you already have a plan mapped out, involve them in the planning and goal-setting stages of your programs. Take the time to clarify each other’s objectives and KPIs. What numbers do you need to hit? What does success look like for each of you?

Also be sure to identify your common objectives.

“To be effective, collaboration needs to be based on a common set of objectives and the desire for a win-win partnership. The most successful and sustainable collaboration processes are those where both parties move towards obtaining their desired objectives.”- Paris Gogos, Vice President of Product at NeoGrid North America

Iron out the details and plan your program accordingly. Doing so will not only improve how you execute the program and track results, but it also helps your retail partner become more invested in the program’s success.

Tip #2: Set regular meetings to review performance and results

To ensure that both parties stay on track, arrange regular meetings to review program performance. According to PwC, this step in joint business planning enables “CPG firms and retailers to set realistic targets, meet market demand, and minimize stockouts.”

PwC shares an example in which a leading UK retailer and a global market leader in oral care collaborated by adopting a “one team” approach. Leadership teams from both enterprises met on a monthly basis to discuss their forecasts, performance, and results.

Doing this enabled the companies to agree on “changes such as promotions, shifts in service levels, and adjustments to shared benefits.” Not only that, but the collaborative effort paved the way for “improved delivery rates, increased on-shelf availability, new targeted promotions, better margins, reductions in inventory levels, and easier agreement on other collaborative initiatives.”

Consider adopting a similar approach. Don’t wait until the end of your retail program to evaluate its performance. Schedule regular meetings with the retailer throughout the duration of the initiative, so you can both review the results and agree on the best course of action going forward.

Tip #3: Cultivate strong human relationships with your retail partners

Strong corporate partnerships are rooted in the same things as human relationships: trust, decency, and empathy. Don’t lose sight of these values, and strive to cultivate strong human relationships from the top down.

Too often, partnerships start off really well at the executive level, but don’t translate in-store because employees aren’t engaged. This not only results in poor program performance, but your relationship with the retailer could also turn south.

According to retail expert Jaymison Haeussler, the relationship between the retailer and the brand — particularly when it comes to store representatives from the CPG side — is critical to the program’s success.

“The biggest thing is having a rep who is not pushy and is more considerate to the retailer. I’ve seen reps come in and say ‘I need this, this and this and why isn’t it done and why haven’t you called me?’”

“That attitude makes the retailer step back and think, ‘look I don’t need someone to tell me how to run my store.’”

He adds, “from the retailer perspective, when a rep gives us a hard time, we end up with a very jaded experience.”

This can be avoided by training your staff properly, promoting empathy, and making your programs easy to implement.

As Rob Volpe, founder and CEO of Ignite 360 says, “The CPG team responsible for planning the program need to have empathy for the people who will have to execute the program — the staff working at the store level. Make it clear, easy to implement and demonstrate the win-win for both the retailer and the manufacturer.”

“As the program executes, make sure the sales team that is out in the field is engaged and does what they can to help out. A little fluff and fold helping make the program look better benefits everyone.”

Tip #4: Share the right data and insights

CPG firms and retailers must agree on what data to share with each other.

“A collaborative partnership should leverage each party’s unique data and expertise. Brands will have broader and deeper insights about consumer behavior, demographics and circumstances, whereas retailers will have a better view into shoppers’ in-store behavior.”- Paris Gogos, Vice President of Product at NeoGrid North America

So decide on what data or metrics to share. For instance, the CPG firm could share information on market trends or consumer insights, while the retailer can provide inventory and POS data.

You can also consider implementing joint customer surveys. Take for instance, what Unilever did with Migros, a leading retailer in Turkey. The two companies teamed up to conduct an in-store survey, in which they learned that shoppers saw hair conditioner as expensive and unnecessary.

As a response, Unilever and Migros implemented price promotions and modified shelf space to put conditioners next to shampoos, to encourage customers to view conditioner as a companion product.

The result? Unilever’s hair conditioner revenue grew by 36 percent, and Migros’s by 25 percent

Tip #5: Use the right technology to track results and share information

Once you’ve ironed out the program details and agreed to share insights with your retail partner, the next step is figuring out how you’ll track and share program performance, results, and insights.

There are plenty of ways to do this. On the retail side, the store could create sales and inventory reports and provide those to the CPG firm. Some companies even go a step further by sharing POS data automatically.

According to PwC, when Godrej Consumer Products of India set up electronic data interchange (EDI) interfaces to automate the exchange of information with retailers, the company saw revenue from retail increase by 28 percent.

In some cases, you can also track performance and share data using task management and retail audit software. Using a cloud-based solution to conduct retail audits and evaluate your programs enables you to share real-time information with your team and your retail partner. This not only keeps everyone on the same page, it also allows you to quickly implement program changes when necessary.

In closing

The best retail partnerships are rooted in the efforts of great people, proper planning, and reliable technology. Get these three components right when planning and executing your retail initiatives, and you’ll dramatically improve your results.

OTHER CONSUMER PACKAGED GOODS RESOURCES

Refer to the Consumer Packaged Goods category for checklists, how-tos and best practices for the consumer packaged goods industry.

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