Category and shopper management specialist Bridgethorne has urged FMCG suppliers to be better prepared for potential cost price discussions with retail multiples, following Tesco’s temporary suspension of Marmite and other Unilever brands.
Changes in the economic environment in recent months may be placing some manufacturers under unavoidable cost pressure. With the value of sterling having hit its lowest value against the US Dollar for more than ten years and its lowest against the Euro for over four years, Bridgethorne is warning that any supplier purchasing finished product, raw ingredients or packaging materials in either Euros or US Dollars could face a hit on its profitability.
“We are operating in economically turbulent times and, against a background of increased utilities, insurance, fuel and labour costs, many suppliers may not be able to absorb all of these costs,” explained Andrew Cole, Joint Managing Director, Bridgethorne.
“However, if a supplier is considering a change in cost prices, it is essential that they are not only fully prepared and are clear on their objectives but also that they take time to understand the retailer’s position in order to achieve an outcome that is mutually acceptable.”
With this in mind, Bridgethorne has introduced a new service to its training offering designed to get suppliers ready for cost price discussions. This includes a review of current shopper behaviour its impact on retailing; an understanding of the retailer’s position and what their approach to the issue may be and a look at the approach that may be best to help suppliers facilitate cost price conversations with trade partners.
“Suppliers need to build a category-based rationale to help defend their brands,” added Cole.
“We have already had a number of clients approaching us for guidance on how to deliver a compelling argument, how to position their rationale and how to overcome retailer objections. The aim is to help them achieve collaborative trade meetings and give them the confidence to enter those conversations constructively.”