Tech Tensions: How Retailer investment in technology is pushing manufacturers farther away from bargaining table

Topics: IT, Technology, Joint Business Planning

The immense pressure on retailers vying for consumer attention and loyalty is prompting a reinvestment in technology that turns data collection into data-driven actions. Unfortunately, the results of many of these retail technology initiatives leaves manufacturers struggling to keep up – shifting pricing strategies, revised category makeup, new delivery models and more.

tech troublesWhile these actions may appear to be arbitrary attempts at chasing the elusive millennial shopper, or more likely the agile and invasive Amazon, the reality is that retailers are navigating the future of shopping using technology that helps them understand, predict and direct consumer behavior.

Manufacturers, on the other hand, are left reacting to these retailer “mandates” out of fear of being blocked out. While technology investment without strategic alignment is never the answer, manufacturers must put themselves in a better position to create change, collaborate with retailers and sustain growth in today’s shopping environment.

How can manufacturers use technology to address the widening retailer/manufacturer gap?

1) Create one version of the truth

One of the reasons that retailers perceive to have all the decision-making power is that historically they have possessed most of the data. As a result, when issues of promotional performance or retail execution were disputed, the retailer was the only party bringing more than gut feeling to the table. Today, CPG companies need to have their own accurate version of base and promotional performance through real-time post-event analytics to begin conversations with retail partners in a true collaborative environment.

2) Predict partnership potential

When retailers make decisions, it is understandably to their benefit. The impact on manufacturer is not being calculated or considered because manufacturers have not had the capability to present an alternative. Using predictive analytics, as part of a comprehensive Trade Promotion Optimization solution, manufacturers can not only predict the volume, revenue and profit impact of incremental funding requests and pricing changes from retailers, but also create alternative promotions or promotional plans that quantify manufacturer and retailer KPIs for real joint business planning.

Today’s retailers are investing in the technology that is meant to keep them afloat during the flood of competition and disruption by equipping them with the actionable insight to dictate change. If manufacturers do not do the same, not only will they remain the collateral damage of retailer tactical shifts, but may also risk losing their own competitive advantage as other companies embrace analytics-driven decision making and collaboration.

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