As most pro-active NAMs are aware, business is not about awaiting a ‘return to normal’ but rather a case of making sense of the ‘here & now’ as a basis for action.
However, in the current unprecedented market conditions with often contradictory pictures coming from economists, politicians, and bankers it is tempting to be diverted by the apparent ‘doom & gloom’ instead of seeing opportunity in the chaos and acting while others await stability in order to make ‘good decisions’.
Making sense of incomplete data in a changing market environment, whilst often having to work with limited resources, characterises the entrepreneurial NAM.
Despite the chaos, business is still about a balance of risk and reward, generating a return on capital employed of 15% in spite of prevailing interest rates of 1% on deposit, whilst meeting the needs of a savvy consumer increasingly demanding demonstrable value for money, via retailers that need to be persuaded to meet fair share criteria in trade partnerships.
Moreover, with advertising awakening needs in many categories that cannot easily be satisfied by cash-strapped consumers, shoppers are becoming increasingly tempted to risk pilfering ‘high-demand’ goods. The resulting pressures on retail margins are in turn causing retail multiples to attempt to pass risk and cost back up the supply chain, thus adding to supplier difficulties in producing acceptable levels of ROCE.
These are the real-world conditions within which account managers have to operate in the foreseeable future…
A NAM’s job is therefore about being realistically optimistic in the search for profitable orders. It is also about knowing and optimising your competitive appeal in the eyes of increasingly savvy consumers, shoppers and retailers, translating that appeal into gaining a fair share of sales and profits in a market that seems determined to frustrate all efforts…
As never before, it is critical that a NAM takes advantage of a heightened focus on money and financial performance in making every £1k of trade investment count through a combination of achieving minimum levels of incremental sales to cover its cost, and guaranteed levels of willing compliance in the aisle. There needs to be a renewed emphasis upon demonstrable value for the consumer, retailer and supplier. Good brands that are positioned in this way, have little to fear from the increasing competitiveness of other brands and own labels in the category.
All of this has to work in an environment where retailers are seeking effective differentiation by a combination of loyalty schemes, Generation 4 own label, exclusive lines, and strong brands.
This in turn makes it essential that suppliers change their approaches to customers, evolving the invest, maintain and divest strategies that reflect the importance and different roles of the players in their customer portfolios. Moreover, given the increasing impact of Tesco upon medium and smaller retailers, it is important for NAMs as business consultants to help other retailers to compete with the UK’s No.1 player.
This can be achieved by advising their customers to ‘Out-Tesco Tesco’ i.e. do better than Tesco on some aspects of the retail offer. NAMs should help their partner-retailers to adopt leading-edge retailing principles and optimise differences at outlet level. It is also important to enhance the customer’s competitive edge by price-matching Tesco on KVIs, and by attempting to provide complementary items not yet on Tesco’s radar, using the supplier’s knowledge of the consumer-shopper to fill in ‘gaps’ in the categories.
Finally, realistic NAMs know that not all customers are going to survive the current financial pressures, even with help from entrepreneurial NAMs. They also know that if a customer goes bust owing £150k to a supplier that makes a 5% margin on sales, then the supplier needs incremental sales of £3m to recover the loss, an achievement that might prove to be beyond the limit for even the more realistically optimistic of sensible NAMs….
