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Discounters: it's time fmcg suppliers got real. But they need help from retailers

2015-05-02 - David Sables is CEO of Sentinel Management Consultants - sales negotiation advisors to leading fmcg suppliers
Source - The Grocer

OK, so are we are all agreed discounter share growth holds risks for UK consumers and suppliers as well as the obvious threat to retailers? Shoppers walk their way blindly into a world of low choice and suspect imports, while suppliers feel the knock-on effect of the price wars with a doubling of those in significant financial distress, not to mention the scandalous brand rip-offs.

It’s not going to stop though, unless we all face up to the new future of UK retail, accept our own part in the journey to current supermarket super-mayhem, and operate in the reality of how to put it right for the shopper. Otherwise, by the time the macro-economic environment has turned the corner we will have melted our own commercial grocery supply infrastructure. Bad for whoever gets past the post in the general election.

Suppliers have been at fault over the past 20 years, grabbing space by proliferating product ranges on the flimsiest of consumer rationales. Come on, admit it suppliers: it was mostly a grab for share of shelf. I remember selling Pampers Boy/Girl, doubling the brand’s space overnight justified by babies’ gender and wee direction - need I say more? Retailers clearly carry a share of the blame for encouraging this swarm of complexity, knowing each little bee brought in extra commercial honey as well as providing an opportunity to re-negotiate margin with the supplier. Come on, admit it retailers: it was mostly about the commercial income. Compound that then with the ugliest baby of all - the mash of supermarket promotions born from internal focus on retailing. Layers of complexity and the result is a bemused shopper who votes with their feet for low-cost, low-choice simplicity.

Suppliers can accept the pain coming their way or deal with it and win. Be honest with yourself: does the consumer really need all the variants and packaging formats you carry? You don’t need to lose share of shelf or share of sales if you discontinue half your products. You just need to trust that the rules are being fairly applied to your competition and go forward. But there’s the phrase that gets in the way - ‘trust the buyer’. That’s a challenge to the retailers: don’t make a leap of faith while the suppliers battle internally over ‘to lead or be led’.

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