Collaboration between retailers and their suppliers has been evolving for many years. Retailers and suppliers are increasingly collaborating across multiple business segments, such as supply chain processes and merchandising, and thus improving their relationships. While this is good progress, the consequential improvement in business operations is skewed toward retailers.

When retailers and suppliers were asked whether their collaboration has improved in the past two years, an overwhelming proportion of respondents from both categories reported positively:

  • 85% of retailers said that their collaboration has improved with their suppliers over the past two years.
  • 92% of suppliers said that their collaboration has improved with retailers over the past two years.

Retailer-Supplier Collaboration Has a Direct Impact on Overall Company Revenue

Over the past two years, retailers and suppliers have gained efficiencies in business operations through improved collaboration, which has a direct impact on their overall revenue. Both retailers and suppliers were asked about the impact of improved collaboration on their revenues. Using the responses, the study was able to estimate the average revenue per retailer and per supplier that is positively impacted by improved collaboration. Retailers and suppliers who cited improved collaboration indicated that improved business operations impact around one-fifth of their total revenue. 

Retailer-Supplier Collaboration Improves Customer Experience

Improved customer service emerged as the top advantage of good retailer-supplier collaboration, with 39% of respondents citing it as a key advantage. With increased competition from numerous channels and the growing prevalence of omnichannel shopping, both retailers and suppliers understand the importance of delivering optimal customer experience. Retailers’ transparency on parameters such as in-store metrics, promotional campaigns and shopper loyalty can lead to analytics-driven demand forecasting that keeps customers at the centre.

Higher efficiencies in operations surfaced as the second-best advantage of a good retailer-supplier collaboration, according to 37% of all respondents. This complements the findings above, as improved collaboration between retailers and suppliers—from as early as the first mile—is expected to increase operational efficiency. In addition, 33% of respondents cited lower costs in supply chains as the key advantage of good retailer-supplier collaboration. 

Key Criteria for Retailer-Supplier Collaboration: Reliability, Credibility and Trust

The collaboration between retailers and suppliers depends on mutual contribution. While both retailers and suppliers understand the importance of sharing shopper-focused insights such as promotional analytics and loyalty data, the partnership must follow a strategic and defined path to ensure success from their collaboration. Respondents were asked to rate criteria they look for in their supplier/retailer partners in order of importance. The majority of surveyed retailers (75%) cited their suppliers’ ability to fulfill their promises as “important” or “very important” for successful collaboration, making delivery on promises the top criteria for this group. The most important criteria for suppliers when collaborating with retailers was having appropriate resources, with 60% of surveyed suppliers citing this criterion as “important” or “very important.”

SIx in 10 retailers and almost five in 10 suppliers cited their partner’s ability to identify actionable insights as “important” or “very important.” The importance of having  appropriate resources to mine data and its interpretation is even more important to both retailers (70%) and suppliers (60%). 

Furthermore, for successful collaboration, both retailers and suppliers recognize the importance of their partner’s ability to respond to changing market trends and consumer behaviour. In fact, 70% of the retailers and 58% of the suppliers cited responsiveness to consumer and market trends as “important” or “very important.”

In addition, to achieve the number-one goal of better meeting customers’ needs, retailers and suppliers should consider increasing data transparency by collecting and sharing data beyond basic aggregated sales and inventory data. For example, the next logical step would be to share item, basket and anonymized customer data; this will allow retailers and suppliers to collaboratively develop insights that address  customer needs and, in turn, drive growth and increase customer satisfaction.

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The final article in this series will identify best practices and opportunities to improve retailer-supplier collaboration.