When we play with a finite mindset in the Infinite Game, we will continue to make decisions that sabotage our own ambitions. It’s like eating too many desserts in the name of “enjoying life” only to make oneself diabetic in the process.
(Sinek, Simon. The Infinite Game p23. Penguin Books Ltd. Kindle Edition)
We are caught in the midst of one of the greatest commercial challenges that has ever been seen. The global pandemic has in the last six months transformed the retail landscape.
What is success within the new relationship between supplier and retailer? If you don’t believe that everything is now new, post-lockdown, please think again… When you and your team reflect on the year gone by, what are you celebrating? When you plan for the year ahead, what is it that dominates your focus?
There are generally two approaches to business. One approach is to focus on short term gains, with a complete dedication to winning and beating the competition. This approach prioritises market share, income, profits and is focussed on shareholder demands ahead of customer needs.
The second is to think about business as a never-ending process of finding new ways to service customers and fulfil a corporate mission. This approach is full of creativity, it seeks to connect with partners who can support and enhance the mission and it recognises that opportunities should be sought out to think of solutions to problems.
We repeat, we are caught in the midst of one of the greatest commercial challenges that has ever been seen. The radical impact of the global pandemic has in the last six months transformed the retail landscape.
Footfall on high streets has dropped significantly. The shopping experience has shifted from one of browsing and exploring to a mission to secure essentials. Consumers are not buying for holidays, events and gatherings, they are buying for themselves, simply to live.
Where does that leave retailers and where does it leave suppliers? The answer is simple, gasping for breath.
Nobody is unaffected, even the winners are struggling to adapt to new shopping habits, new channels and different demands. The losers are fighting for life, desperately seeking ways to recover and find their customers.
Some businesses are known for stability, their ability to consistently deliver year after year. But where are they now, because stability isn’t helpful when everything changes? Stability now leaves those businesses looking to catch up, solid foundations and immovable strategies are now weighing them down and slowing attempts to change.
What is required now are businesses able to adapt, flex and change. The next few years could see a huge shift back to the way things were, or it could see further changes. Businesses that flourish will have done so because they recognised that they needed to change and empowered their people to do so.
Given the need to change, what is the impact for account teams facing up to a customer with demands to cut prices?
It depends on the strategy of the company they represent and how they see the long term. At this moment in time, looking to last year for a model is unhelpful. Trying to forecast the future based on the data from this year is a waste. Change has been that fundamental.
The basis of a great partnership agreement or joint business plan from before cannot apply now. There is no point looking at the templates and inputting the numbers.
Reviewing the performance of the promotions for the past year or even the year before is pointless. The consumers are in new places, they are buying different things and could be for half or more of the upcoming plan period.
The smart account teams are sitting with their customers in virtual meeting rooms, coffee in hand, thinking about possibilities and solving problems. They have opened a blank sheet of paper and both buyer and seller start by thinking about what they really want, in an ideal world, which for many could simply be a partnership that exists in 2025/2030, then they work back.
Maximising profits at the expense of the other party in a deal this year might seem a tempting target, but if this short-term exploitation results in a hole in the market because a company went under then it does more damage than good. Both sides need to recognise this.
The optimal partnership plan for 2021 will have protection for both sides in case of extreme shifts in behaviour so neither side is excessively affected. A case in point would be retail landlords’ willingness to acknowledge the impact of lockdown by amending shop leases to reduce rent by 50% in the event of future lockdowns. It will also contain opportunities to change and adapt, with leadership on both sides prepared to regularly review and communicate. The ranges might be different to this year and should be anchored on insight.
The plan will reflect the marketplace and will answer key questions. What do consumers now want, where are they shopping, what do they consider an essential and what is premium? Nobody can use history as a guide because so much has changed.
Ask yourself are you thinking 2025 or 2017? Challenge the retailer for evidence, prepare to be asked for data as the retailer considers all options.
Be prepared to be wrong, be prepared to think anew and avoid the trap of trying to make making money in 2021 at the expense of any business at all in 2025. Perhaps the margins in the year ahead are lower than before, but your ability to put the value of the commercial partnership ahead of profits as everyone learns how to operate in the new world may set you apart.
If you or your trade partner choose to rely on escalating commercial tension with threats, delists, refuse to supply, and cancelled activities then you could be starting a wrestling match to prove your strength at the moment the lions show up. While you are fighting each other, both of you are eaten. Keep an eye on the big threat you are facing, consumer confidence and behaviour. Instead of opponents, seek allies, alignment, flexibility and ideas, the new normal.
By Chris Webber, Founder of Foxleigh Consulting
Email: [email protected]
