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Be careful what you share with customers: keep your advantage

2014-06-14 - David Sables - CEO
Source - The Grocer

Do retailers’ own brands get an advantage from the information we share? I researched this question before addressing policymakers and the OFT last week at the Retail Symposium. The answer is a resounding ‘yes’. More interesting, though, is the astonishing level of acceptance from suppliers.

Private-label share varies of course, but they are often the largest in the category. The custodians of this competition are the same people upon whom we lavish information in the name of excellent customer service. Suppliers are thrilled to be asked for category information and gladly share hard-earned insights.

Forget pack size and logistical information, that’s not the problem here. And sure, they need pricing terms, market insight, pricing elasticity and product USPs, or they would be unable to predict volumes, negotiate listings and allocate shelf space correctly. But retailers often demand information for range changes some five months in advance. Just good planning? Now they ask for three-year ‘innovation roadmaps’. Just good business management? Perhaps, but they also check their own-label manufacturers’ ability to keep up. Of course they get an unfair competitive advantage! Wouldn’t you love to have control over all the category products’ pricing and promotion plans and be able to spot the gaps in the market? And to collect insight from everyone involved then apply the proven concepts to your own product – with minimal development?

Suppliers, of course, want to sizzle-sell their launches to get established across the customer’s functions and hierarchy. So they press for early concept launches, with a carefree attitude to the giant own-label threat. So don’t moan when customers abuse it – you would in their shoes.

This issue falls through the cracks in competition law. So we need to view our customers as competitors as well as ‘partners’. I argued last week that consumers lose out when own label brings fast low-cost offerings against you, using your insight. The price may come down in the short term, but then small suppliers can’t survive without compromising quality and reduction in innovative research. Be guarded in what you share and when. I don’t think the OFT will, or necessarily should, protect you on this.

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