As the world of retail continues to change, a more collaborative future must be the priority

In this guest post, Advantage Group’s Leandro Bonder looks at the changing nature of the buyer- supplier relationship, and why the journey from collaboration to engagement should be at the top of the list for forward-thinking Retailers.

Even for the most efficiently run organisations, Covid-19 served to put extreme pressure on the relationship between retailer and supplier. As businesses on both sides sought both to protect their staff and customers and continue operating as best they could, sacrifices had to be made and long-standing strategies abandoned in favour of quick solutions to the most pressing problems.

But even as Covid-19 spread across the globe, some companies were thinking not only about their own challenges but how they could harness the combined potential of their partners and suppliers to tackle their shared objectives. By doing so, these champions of collaboration helped to ensure a brighter future not only for their own businesses, but for their trading partners and customers too.

I believe that there are four key tenets that define good collaboration today.

  1. Constant communication
    Staying in touch is important, even more so during a crisis. One of the most interesting things about retailer-supplier communication during the pandemic is that, while the frequency of contact rose, formality dwindled in tandem. Prioritising agility over process, regular quick and informal discussions over email, phone, video, and messaging apps became the norm.
  2. Sharing and transparency
    Getting the right information at the right time has always been important but became a critical issue during the early days of the pandemic. This has been an area that has presented some of the greatest challenges for retailers and suppliers alike, absolute transparency between business partners is integral to building and maintaining trust, the key ingredient to successful collaboration.
  3. Win-win outcomes
    Focusing solely on your own success is the very opposite of collaboration. Setting shared objectives, putting personal agendas aside, and working together to the consumer’s ultimate benefit is the hallmark of a great partnership, and something that many retailers and suppliers worked hard to realise in 2020.
  4. Problem solving and compromise
    Sticking rigidly to a plan in the face of huge disruption is ultimately futile. The ability to put existing strategies to one side, compromise, and focus on solving the problems together fosters creativity, empathy and partnership.

Good relationships require the ability to listen

If there is one theme that unites each of these four pillars, I believe that it is the ability to listen. As a company that has been measuring the impact of collaboration by way of business-to-business engagement for more than 30 years, we’ve seen time and time again that being able to understand what success looks like for your partners is the best foundation for a collaborative relationship.

This ability is only going to become more important in the future. COVID may have driven significant changes over the past 12 months, but its full impact is yet to be felt. For consumers, retailers, and suppliers, a period of further disruption lies ahead.

From the shopper point of view, economic uncertainty and high unemployment are likely to influence purchasing decisions. What they buy, how they buy it, and when they buy it will all be subject to much greater scrutiny. Impulse purchasing will likely decline, and value will become a major driver.

At the same time, COVID has already fuelled a surge in operational costs. Stringent safety measures mean that companies have had to redesign the way they operate warehouses, distribution centres, and in-store environments. And the surge in online represents an additional threat to profitability, with the cost of operation notably higher than it is for in-store.

Customers will expect their spend to go further, just as retailers and suppliers find that the dynamics of doing business have become more expensive. This is an unbalanced, and ultimately unsustainable equation.

In this situation, smarter collaboration represents the only effective way forward. Just as retailers and suppliers came together at the height of the pandemic, the opportunity now exists to navigate these challenges not in isolation, but in collaboration.  And in fact, now is the time to embrace an evolution from collaboration (which represents ways of working together) to engagement, where retailers and suppliers see each other as an extension of one another’s business.

Our experience suggests that suppliers have never been more willing to learn; to understand whether their pre-crisis goals and mindsets remain relevant in a post-pandemic world. Retailers have a phenomenal opportunity to engage in that dialogue and help set the tone for the years ahead.

This represents an evolution. We see the chance here for retailers to go beyond just collaboration, moving instead towards engagement with supplier partners. That is important, because engagement is where the real value lies. Engagement encourages suppliers to act as advocates for your business, fuelling passion, interest, and innovation.

Suppliers and retailers both stand to benefit from this transformation. In our own studies, suppliers have told us that they value the trust, understanding, and responsiveness that comes from working with collaborative retailers. They enjoy the greater productivity, the sense of urgency, effectiveness, and capability.

For retailers comes an opportunity to tap into the information and insights suppliers hold on the categories they operate in. So too does the opportunity to help suppliers understand the role they can play in better serving shoppers, how to contribute to the retailers’ strategies, and improve retailers’ capabilities. And, from a purely financial point of view, engaged suppliers may be more willing to help drive co-operative business initiatives and platforms.

These are the kinds of win-win outcomes that are on the table, when collaboration and supplier engagement are key imperatives for retailer organisations. Before COVID, retailers were seeking to collaborate with their supplier base whilst aiming to build a higher competitive advantage.

Now, supplier engagement is an essential strategy for sustainability and growth.

Leandro Bonder is Vice President, Global Client Development of Advantage Group International. Advantage Group is the leading advisor in business-to-business engagement globally.

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