Supplier-retailer engagement: the badly-kept secret to growing private brand sales

by Simon Heath, Business Development at S4RB (Solutions for Retail Brands)

In 2017, retail success (especially in grocery) pretty much demands successful private brands. Retailers with their own product ranges offer consumers a compelling reason to choose them over competitors, and benefit from comparatively high profit margins on their home-grown items. Both footfall and profitability are profoundly impacted when the right private brand products are part of the mix.

Of course, it’s not enough for retailers simply to offer any old private brand products. They need to capture shoppers’ attention: with great value, innovative products, unique offerings, locally-sourced produce, environmentally responsible packaging and more. To really get ahead in this key area, retailers need to be adaptable – able to act quickly in response to ever-evolving consumer demand.

And like it or not, retailers are absolutely dependent on their suppliers when it comes to bringing these vital private brand products to market. The days of the ‘white label’ scenario – where products are simply re-branded with the retailer’s name – are now far behind us. Today, it’s all about creating compelling products that are exclusive to just one chain. And this requires close collaboration with suppliers so that best practice can be shared and followed by all concerned, leading to faster product development, leaner processes, controlled costs and – in the end – really satisfied customers.

It’s against this background that S4RB (Solutions for Retail Brands) has spent the past 10 years working with retailers around the world to help them build successful private brands by improving their Supplier Engagement. Our philosophy is that retailers cannot afford to hold suppliers at arm’s length, issuing demands and expecting to be obeyed. Instead, the best products are built when everyone involved works together as one team, with shared knowledge and expertise, as well as common motivations, goals and enthusiasm. This is hardly revolutionary – we know instinctively that people do their best work when you treat them with consideration and respect, don’t we? And yet, this simple and key principle is often forgotten amidst the hurly-burly of daily life in the retail sector.

Supplier Engagement is about retailers taking the time to support their suppliers so that they can do their best work. It can feel counter-productive to take the time to nurture supplier relationships beyond the basics of onboarding, but the consequences of not doing so are serious: misunderstandings, avoidable errors, delays, waste and unnecessary costs. Taking the time to build good Supplier Engagement – by investing in increasing suppliers’ understanding of what they need to do and their motivation to do it well – pays clear dividends.

The good news is that all retailers already have some level of Supplier Engagement. All that’s required to give that vital boost to their private brand operations is to take small, manageable steps to improve in three important supplier-related areas: communications, support and transparency.

Through better communications, retailers can help their suppliers understand what is required of them, cutting down on mistakes and delays. They can also work on the tone of what they say to transform the relationships they already have, motivating suppliers by making them feel like a valued part of the team.

It’s also important for retailers to provide as much support as they can for suppliers. After all, if suppliers know where to look when they have questions or need help, there will be fewer delays and retailers will spend less time answering the same old questions. A Gartner/Avaya study has estimated that the cost to retailers of providing an online self-help portal for suppliers is 74% less than answering questions by either phone or email.

Transparency around supplier performance and product performance is also an important factor in building Supplier Engagement. When retailers take the time and effort to share product insights with the right people, both retailer and suppliers can make informed decisions based on a single view of key data, enabling them to work more cost-effectively and efficiently to deliver winning products. This kind of behaviour has been shown to increase Supplier Engagement by up to 200% and to increase the number of retailer requests completed right-first-time by up to 300%.

Good Supplier Engagement ensures that retailers and suppliers are aligned as ‘One Team’ around a common objective. As a result, conversations that happen within that team often turn to change, resulting in important initiatives (such as reducing salt across a whole product range), great new product ideas and proactive suggestions about how to better serve customers.

The more engaged your suppliers, the faster you can react in the hyper-competitive private brands game, and the more people you’ll have on your team – making your brand the best it can be. You’ll spend less, yet stand out more. And for your suppliers, life will become more pleasant, with a respectful atmosphere of team work between you, along with the prospect of growing business and shared success. Supplier Engagement benefits everyone in the private brands game. So, what will you do now?

To find out more about Supplier Engagement and S4RB, visit www.s4rb.com