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The Unley

What retailers want from suppliers in 2020

August 17, 2020
By John McLoughlin

There is no doubt that issues arising from COVID-19 have dominated focus for suppliers this year.

However, we will eventually emerge from this situation, and as we do, we will return our attention to the issues that relate to a more normal trading environment.

Retailers provided some very clear feedback to the supplier community via the 2020 Drinks Association Advantage Engagement Survey this year on areas of focus beyond collaboration during the pandemic.

Rapid changes in shopper transaction, business models, technology and emerging new channels are making the path to high performance less clear.

Retailers are looking for trading partners who can help them manage and achieve expectations in their business today, as well as help them get ready for changing requirements tomorrow.

Here are some of the most prevalent themes from the feedback as they relate to “managing for today”, and “helping me get ready for tomorrow”.

Managing for today

1. Demonstrate partnership through understanding retailer strategies

When retailers describe suppliers as “partners”, they are talking about suppliers who understand their business and who jointly build and deliver plans that demonstrate a willingness and capability to help them achieve outcomes aligned to their unique strategies.

Many liquor retailers have been actively reassessing their strategies over the last 12-18 months. Retailers believe there is an opportunity for many suppliers to improve their understanding of these changes.

Suppliers need to stay curious, seeking to understand what their customers are trying to achieve, and using that knowledge as they develop internal plans and engage through joint planning.

“This supplier proactively seeks to understand how we’re evolving our high-level objectives. They find a way to make it work with their business. It unlocks a lot of opportunity for both parties to have those high level, upfront conversations. Then we get into the detail and develop a strategy to get there.” – Australian liquor retailer

2. Execution as a driver of category growth

When evaluating supplier execution, retailers will assess operational effectiveness and capability to manage brands through the lens of how this contributes to the growth of the category. It includes marketing, range management and in-store promotion, as well as reliable, efficient stock availability.

The point that retailers often feel is missed by suppliers is the importance of category growth outcomes. Retailers are, more than ever, alert to a share-shift focus, and feedback shows that there is a real opportunity for suppliers to secure a higher level of support from retailers if they employ a more category-centric approach.

Liquor is a category brimming with exciting and innovative brands. Suppliers who are able to look beyond the power and growth of individual brands, focusing first on how to grow the category through their brands, will find it easier to align their execution plans with retailers.

“Suppliers need to demonstrate thinking about the category holistically. Their attitude needs to be about playing a role for the greater good of the category. Certain suppliers have jumped on this and understand that all boats rise with the rising tide. Others are so dependent on market share, focusing only on their own brands, that they lose relevance in our growth plans.” – Australian liquor retailer

Getting ready for tomorrow

1. Reputation and the growing impact of e-commerce

At the core of reputation is an assessment by retailers about who you are as a supplier. It represents their trust in you, how reliable are you in doing what you say you will do, how closely do you align with their values, and do they believe you will be a good partner into the future.

It is the latter area that is being heavily impacted by quickly evolving changes in technology and shopper transactions.

Reputations are being built more rapidly in the emerging e-commerce arena. The recent COVID-19 crisis has turbocharged retailer investment and focus in their e-commerce platforms and digital traffic.

Partnership opportunities will develop quickly, and the pace and capability you demonstrate in this growth area will likely also have a disproportionate impact on the overall reputation of your business.

“During the crisis, every supplier came out of the woodwork to talk to us about online, and capability varied dramatically. Online will be more front of mind moving forward, and we have seen evidence of this already. If they are not already activating in this space, suppliers will struggle. Regardless of the percentage of online in their business, suppliers will have to invest.” – Australian liquor retailer

2. Vision grounded in insight

Retailers highly value suppliers who are able to help them prepare for and navigate an uncertain future through a capability for identifying opportunity and risk from current trends.

This capability begins with the depth of understanding the current situation, and the trust retailers show in a suppliers vision will be based on the degree to which a supplier can demonstrate this understanding.

South West Rocks Country Club

Retailer expectations of how suppliers utilise insight and knowledge to support future thinking are generally not being met. Understanding shopping and consumption drivers is a foundation skill, without which it will be difficult to partner with retailers to drive future growth.

“Supplier capability with regards to utilising insights, understanding shopping decisions and anticipating future consumption is still not close to where the FMCG companies are. A challenge we have in liquor is there are a couple of big players and then it drops away quite quickly. Small to medium suppliers have to make an investment choice to get ahead of the game rather than always following.” – Australian liquor retailer

For suppliers, it is clear that retailers are beginning to think about your engagement with them not only in managing the business for today, but also in getting ready for tomorrow.

The Advantage Team are drawing on global insights to assist development of this approach. Our purpose is helping businesses be better together, and we look forward to working with you to achieve this aim.

Advantage recently summarised these global insights for Drinks Association Members – click here to read more.

The suppliers with winning strategies

The results of the 2020 Advantage Engagement Survey were used to determined the winners of the 2020 Australian Drinks Awards.

The trophies went to:

Category Management Award – Diageo

Supply Chain Management Award – Treasury Wine Estates

Most Improved Supplier of the Year – Asahi Premium Beverages

Supplier of the Year – Diageo

John McLoughlin is Managing Director APAC at the Advantage Group. Advantage Australia is a Corporate Partner of the Drinks Association.