Category captains agree open communication is a must for any successful retailer-supplier partnership
Trust. Communication. Collaboration. These are more than buzz words for suppliers and retailers â they are words to live by. In the increasingly competitive convenience retail landscape, both sides of the business equation have come to realize that maintaining a successful partnership, as opposed to just co-existing, proves beneficial for everyone.
"Trust, integrity and collaborative business discussions," was the first thing that Tony Gaines, vice president of small format for Anheuser-Busch Cos., mentioned when describing the key ingredients for a successful supplier-retailer relationship. "If trust from either side isn't established, the business relationship will not develop," he said.
Communication is another must in the recipe, other supplier executives noted. At The Coca-Cola Co., this begins with listening to retailers, not just about what is going on in the cooler, but in the store's overall business, explained Jay Ard, vice president of sales at Coca-Cola Enterprises.
The Altria Group also stresses the importance of a two-way dialogue. The tobacco company holds several meetings a year with its retail and wholesale partners at all levels of the organization: senior executives, category directors and vice presidents, to store and district managers, said Bob Sears, director, trade and state relations, sales training and compliance for Altria Group Distribution Co.
"Those three types of meetings allow us to get a pretty good read on how we are doing from different perspectives of the retail chain," he said. "Feedback is a gift and you can do with it what you want. But if you are not asking for it, you are not going to understand what is going on in the marketplace."
A successful relationship is not going to happen overnight. Both sides need to trust and understand each other, and in most cases, this takes time, noted Tom Joyce, vice president of consumer and industry affairs at The Hershey Co. "Someone once told me that you can learn more by listening than by talking. They were right," he said.
THEORY OF EVOLUTION
The relationship between suppliers and retailers is a constantly changing one, growing and evolving to meet the changing times. And while suppliers applaud the work between the two today, things weren't always so rosy.
"For many years, there were adversarial relationships between suppliers and retailers. I don't know why, but I don't think we felt that we needed each other's help," Joyce explained. "Then, this guy Sam opened a store in Arkansas (Walmart) and Sol opened a club store in San Diego (Price Club) and the Thompsons began opening convenience stores in Texas (7-Eleven) and everything changed."
He noted that the development of the computer also helped bring about change. "Data on store shipments became available; then scanners helped us understand what people purchased. Now, we both have an understanding on how to run a business and how to sell products."
The majority of category captains agree that the dramatic economic downturn that started sweeping the country four years ago also pushed both sides to foster better relations.
"Savvy suppliers and retailers have always understood the importance of retailers and suppliers winning together for a successful long-term relationship," Terry Thomas, vice president/general manager of small format at PepsiCo, pointed out. "However, as a result of the challenging economic environment over the past three years, more suppliers and retailers are working together. Consumer and shopper demographics, and buying patterns changed so fast that suppliers and retailers had to work together to keep up with the trends."
As Larry Lupo, vice president of sales, convenience and retail, Mars Chocolate North America, said, the role major suppliers play has evolved from a selling transactional relationship to a much more collaborative one. "Progressive retailers are expecting manufacturers to come to the table with solution-oriented programs that address the specific, individual needs of the retailers."
Recognizing that convenience retailing is not a one-size-fits-all industry is another key in the supplier-retailer equation. Mom-and-pop retailers have different needs and resources than a chain that has thousands of locations dotting the country.
"Clearly, everyone is different and that's why communication is so important," said Mike Auger, vice president of trade marketing development for R.J. Reynolds Tobacco Co. "To that end, we work together with our retail partners to develop defined strategies and goals, and provide them resources to help capitalize on the tobacco category."
Auger points to R.J. Reynolds' retail partner website, EngageRJRT.com and its latest feature, Get Engaged, as important steps in that direction.
At Coca-Cola, the beverage company uses its Club Coke program to reach out to smaller operators that may feel lost in the shuffle. "We offer Club Coke to the one-to-five-store operator; [it] is specifically built to try to make sure we bring them similar resources that we are bringing our chain calls," Ard said, noting the company has more than 68,000 stores signed up on Club Coke.
SPREAD THE WORD
Regardless of how well everyone gets along, if consumers don't know about products or where to find them, neither supplier nor retailer will see success when the numbers are crunched.
"With 160,000 consumers a day walking into a convenience store, in-store marketing is a very important piece in reaching consumers. For brands with a smaller media presence, in-store marketing helps elevate their profile," explained Gaines of Anheuser-Busch, pointing to its recent introduction of Bud Light Lime Lime-A-Rita as a perfect example.
"A strong in-store execution strategy helped make the brand one of the most successful new launches of the year," he said. "Not only is it important that we continue to leverage strong in-store executions to develop our brands in the eyes of consumers, it also helps retailers highlight why consumers should shop in their stores."
PepsiCo's Thomas echoed the importance of in-store marketing and promotions â to his company and the channel in general. "They are incredibly cost-effective vehicles to drive sales, provide shoppers a value and capture impulse purchases," he noted.
However, too much of a good thing can be, well, a bad thing, cautioned Ard of Coca-Cola.
"We have to watch how much we throw out there. The convenience shopper is typically in a rush. They don't want to spend a lot of time, so the clarity and crispness of the message has to be there," he said. "We have gone from trying to tell them everything about every brand to more of a let's-get-clear [approach]. So clarity vs. clutter is where we are trying to go.
"We know that probably seven out of 10 consumers already have their mind made up, but there are still many consumers that walk into that store and don't think they are thirsty until they see some of the SKUs," Ard continued.
Not all suppliers are created equal when it comes to in-store marketing â through no fault of their own. Tobacco companies find themselves bound by marketing regulations, whether set by the Food and Drug Administration or the settlement agreements the major tobacco companies reached with the states, explained Brian May, manager, communications, Altria Client Services.
And it's not a problem unique to Altria or its brands. R.J. Reynolds faces the same battles.
"Point-of-purchase is one of the few remaining channels we have to communicate to adult tobacco consumers," R.J. Reynolds' Auger said. "Tobacco category sales represent as much as 30 to 35 percent of in-store sales, so it's very important that retailers communicate effectively with their adult tobacco customers. If those customers know the store carries the brands they are looking for and are priced fairly, they are likely to be loyal to that store."
Social media is also becoming a must-use tool for many suppliers to spread the word about their products and drive shoppers into convenience stores to purchase them.
"Social media is an outstanding way to interact directly with our consumers. It's a two-way medium, and the consumer is our best source of information and inspiration for our products," said Lupo of Mars Chocolate. "All of our brand planning is done through integrated marketing communications to ensure we have 360-degree marketing campaigns. Social media is included in that integrated approach, and we've had many innovative social media campaigns for our brands, including around the launch of our new products."
IT TAKES TWO
This does not all mean, however, that suppliers and retailers will walk off into the sunset to live happily ever after. Ultimately, both sides need to be dedicated to making the relationship work, despite any bumps in the road.
"Maintaining open dialogue is critical in terms of defining our mutual objectives and desired end-state," Auger said. "Now, along the way to reaching that end-state, there are going to be times where we might disagree with each other, and there's nothing wrong with that. What's important is that both of us remain focused on the end goal, and we when we reach that, everyone will enjoy success."
Communicating and collaborating sound great, added Thomas, but suppliers and retailers need to follow through to really drive success home.
"Relationships are only as successful as the ability for both parties to execute plans," he said.
"Savvy suppliers and retailers have always understood the importance of retailers and suppliers winning together for a successful long-term relationship."
âTerry Thomas, PepsiCo
"We offer Club Coke to the one-to-five-store operator; [it] is specifically built to try to make sure we bring them similar resources that we are bringing our chain calls."
Jay Ard, Coca-Cola Enterprises
"Maintaining open dialogue is critical in terms of defining our mutual objectives and desired end-state."
â Mike Auger, R.J. Reynolds Tobacco Co.
We all knew those kids in school, the ones who were involved in everything: school play, student government, the Girl Scouts, Little League. Maybe you weren't one of them, but in the real world â when your business is at stake â getting involved is a common theme.
"Everyone is busy and cannot develop relationships with every supplier or retailer. However, if you participate in NACS, AWMA [American Wholesale Marketers Association] or other industry trade associations, you have a better opportunity to develop these critical supplier/retailer relationships," said Tom Joyce, vice president consumer and industry affairs at The Hershey Co. "You always have the opportunity to develop relationships with other industry suppliers. A successful relationship is key to fixing the small things, so you can focus on the big things that can help grow our mutual business."
Just one look at the members who sit on the supplier board of NACS â The Association for Convenience & Fuel Retailing â or at the exhibitor and attendee lists for events sponsored by the AWMA and NACS and it is easy to tell Joyce is not alone in his thinking.
As Bob Sears, director, trade and state relations, sales training and compliance for Altria Group Distribution Co., explained, being members of trade associations opens more avenues for the tobacco company to hear from its retail and wholesale partners.
"We are active members, as well as sit on the board of NATO [the National Association of Tobacco Outlets]; we are active members and I sit on the supplier board of NACS; and we are active members and I sit on the board of AWMA," he said.
With the increase in channel blurring and every retailer, big and small, trying to capture the small trip, Jay Ard, vice president, national sales at Coca-Cola Enterprises, added that it is important for suppliers to understand what is going on in the convenience space.
"We attend a lot of individual events, whether that is NACS events or just going out to meet with the retailers and finding out what is going on in their total business," he said. "Whether that is what is going on with fuel; what is going on with tobacco and the declines they are fighting there; or what is going on with foodservice, it is about understanding the overall business."