The Retailer-Manufacturer Collaboration - Where's it going wrong?

The retail sector has understood the benefits of shopper-centricity for some time now, but the idea is more important now than ever. Shoppers have become savvier - they are more demanding, selective, and sophisticated. With smart phones, shoppers have constant access to promotions, price comparisons and consumer reviews.

The retail game has changed, yet many retailers and manufacturers are firmly attached to their old rules, missing valuable opportunities to collaborate through shared insights and strategies. A gap remains between what the retailer perceives as shopper-centric and the manufacturer's idea of the term. Whilst the retailer thinks in terms of stores and categories, the manufacturer focuses on brands.

Retailers and manufacturers need to identify oppor173tunities to join together to achieve better shopper understanding and marketing. Understand the shopper journey

Shoppers are exposed to greater choices and a plethora of media, so consideration and purchase decisions are being made earlier and earlier. The cycle of consumption and shopping is intrinsically linked and both retailers and manufacturers need to understand the shopper journey both in-store and out-of-store.

Amazon springs to mind as a retailer who fully understands its customers, accurately predicting what other items customers might be looking for during their shopper journey, as well as potential next purchases, and providing consistently high levels of customer service. To be as successful as possible, all retailers and manufacturers need to understand how they can positively impact next purchases, shopper mission, perceptions of different retail channels, and the impact of the shopping and purchase experience.

Promotion overkill can devalue categories

Cleary customers are more price-conscious during a recession. Promotions are the obvious choice to deal with this, but continuous promotion can lead to a category being completely devalued. Think, for example, of how often higher-priced items such as prawns are on two-for-one offer in supermarkets - to the point where as a customer you feel outraged when the offer ends and are far less likely to buy the product until it the offer returns. The strategy risks devaluing brand differentiators and erodes profits, resulting in lack of investment and loss of innovation.

Retailers and manufacturers should instead consider a more collaborative strategy delivers value for both themselves and most importantly, the shopper. 

Present digital shoppers with a united front

People are shopping more consciously and confidently. They have access to retailer and product information at every stage of the purchase decision process, and word of mouth has never been easier.

Retailers and manufacturers need to engage with social media and mobile apps that enable shoppers to easily find exactly what they want or risk losing custom.

Starbucks' recently launched iPhone app not only provides customers with a map to their nearest caffeine fix, but also allows them to pre-order their drinks, and to update and pay via their online Starbucks card. The ease and speed of service offered via the app has made it a huge hit with customers. 

Incorporate shopper and consumer insights into planning and the innovation cycle

Often in the new product development process, the products are developed with specific consumers in mind, using a range of research tools, hope and a little inspiration. Manufacturers may not fully consider the actual retail environment. Knowing where the product will compete, how the package will stand out on shelf, and how consumers will respond to promotions are key parts of the innovation process and frequently forgotten until late in the game.

Thinking ahead is essential for two reasons: the original product needs to stand out from competitors, but manufacturers must also now think about future extensions to the brand or product they are launching. Coca-Cola is a great example of successful planning: the red colour, signature font, and shaping of the original glass bottle have struck a chord with consumers for years. The brand has an incredibly strong identity, allowing Coca-Cola to continue to roll out additional products with ease.

It's important to integrate shopper insights throughout the innovation process when these insights can help refine the product, its positioning and the launch plan, and also for post-launch tracking.

Additionally, retailers should have the opportunity to leverage consumer insights. Manufacturers should align with retailer strategies and bring extra insight to the table to grow overall category insight. This extra insight can be acquired from insights managers or research partners who are responsible for proactively gathering and dispersing shopper and consumer information and pre-planning research investments that could be jointly funded by the retailers and manu173facturers.

The retailer-manufacturer collaboration is not an easy relationship to maintain successfully, but planning ahead of the new product development stage, working with a research partner, and taking the time to collaborate on all aspects of the shopper journey can benefit the retailer and manufacturer, and more so the shopper immensely.

Susan Malcolm - Managing Director of Ipsos Marketing