Retailers are under unprecedented pressure to fulfill customer needs, forecast category demand, manage supply-chain processes and generate growth. It has become more important than ever for retailers to adapt quickly to changing consumer behaviour and market trends.

Retailers can overcome these challenges through effective shopper-centric collaboration with their suppliers. Successful collaboration can help to fulfill customer needs, reduce out-of-stocks and yield leaner and more profitable supply chains by eliminating unnecessary costs. However, collaboration also has its challenges. To successfully collaborate, retailers and suppliers need to understand and respect each other’s requirements. The path to mutual understanding begins with having shared goals and a single version of the truth when collaborating for growth.

In a report, sponsored by Precima, a Nielsen company, Deborah Weinswig analyzes the findings of a March 2020 Coresight Research survey of 210 global retailers and suppliers of grocery products/consumer packaged goods (CPG)—105 respondents from each group—in France, Germany, the UK and the US. Respondents were asked about mutually important criteria for growth, challenges and best practices for successful collaboration.

COPA has summarized this report into a three part series. This first article will look at the key challenges faced by retailers and suppliers. 

Retailers and suppliers see the ability to meet the needs of shoppers as the top advantage of collaboration—and fully 70% of retailers and 58% of suppliers cited responsiveness to consumer and market trends as key criteria for successful collaboration. 

Over the past two years, a large majority of retailers and suppliers said that their collaboration has improved. However, over 50% of surveyed retailers and suppliers indicated that their biggest pain points are the following: lack of trust and communication, limited product assortment to meet shoppers’ changing demand; and lack of data transparency across the supply chain, including control of customer data skewed to retailers.

Lack of Trust and Communication Translates to Challenges When Collaborating
The survey saw 63% of all retailers and 52% of suppliers cite lack of trust and communication as “challenging” or “very challenging” when collaborating. Persistent trust issues keep retailers and suppliers from sharing granular insights with each other, leaving the supply chains far from being demand-driven. In fact, 63% of retailers and 55% of suppliers consider a lack of product availability to meet shoppers’ changing demand to be “challenging” or “very challenging.” 

Two-thirds of retailers stated that improved collaboration has led to increased customer satisfaction; and almost six in 10 say it has led to improved business planning. Greater collaboration regarding shopper-centric data could take these gains to even higher levels, and retailers and suppliers should explore data-sharing opportunities and channels, including cloud-based platforms. When faced with ingrained resistance to sharing data outside of the firm, retail category managers can adopt an incremental approach to test and learn from data-sharing practices, and so build an evidence-backed case for a broader data-sharing strategy.

The next article will discuss the role of retailer and supplier collaboration and how it has changed over the past two years.