Sounding Board: Communication breakdown

What retailers and suppliers hear from each other seems to lose something in translation. “Good leadership requires you to surround yourself with people of diverse perspectives who can disagree with you without fear of retaliation.”    — Doris Kearns Goodwin This quote from the author and historian’s brilliant tome, Team of Rivals–The Political Genius of Abraham Lincoln, described the makeup of Lincoln’s cabinet—largely comprised of political opponents, but whose opinions were valued and respected even if they differed from his own. However, at the end of the day, at least Lincoln and his cabinet were on the same side of the table. I see it as an apt metaphor for the tug of war between retailers and vendors which, somewhat surprisingly, has been the centerpiece of conversations and meetings I have attended in the past several weeks, despite decades of well-intentioned buzzwords and acronyms like Partnering, CPFR and VMI. There has never been a better time in history to revisit the subject yet again given the interesting and sometimes frustrating state of the industry; chain consolidations, rise of the independents; the power of private label; the influence of knowledgeable, cautious, price sensitive and connected consumers who have more choices than ever on where to spend their food dollars. At this point both sides of the table should be tired of trying to gain the upper hand on the other. Long term, the only thing to be gained is a healthy spoonful of mistrust and bad will. There is, unfortunately a pervasive attitude—largely unspoken—that retailers are greedy buggers looking for free stuff and intent on making money on the buy rather than the sell. Similarly, vendors are nothing more than self-serving narcissists who would not hesitate to throw you under the bus. It would be naive to think these stereotypes and the adversarial relationship between retailers and manufacturers have gone the way of the dodo. It is time to face reality; this is a true symbiotic or co-dependent relationship. However, it cannot just be out of necessity. It should be real teamwork. It is, as my friend John Rand of Kantar Retail said at the company’s Mid-Year Forum, a relationship based on MRP—Mutually Required Performance. Paraphrasing John F. Kennedy, Rand put it this way: “Ask not what your trading partners can do for you, but what you together can do for the shopper.” This boils down to five things retailers want from suppliers—a growth vision, category leadership, collaboration culture and capability, the ability to customize and perfect store execution. Conversely, suppliers are looking for reliability in meeting commitments, fact-based decision making, access to decision makers, clarity of vision and store execution of negotiated programs. None of these seem insurmountable and, in my opinion, downright reasonable. However, we seem to be stuck in an endless loop of miscommunication between the two sides. When suppliers say “new and innovative” retailers hear it as “untried and a probably failure.” When suppliers say “relaunch and refresh” retailers hear “resuscitate a dog.” When suppliers talk about “increased efficiency” retailers only hear it as “cutting spending,” Rand mused. Of course, the knife cuts both ways. When retailers say they are “reviewing the category” suppliers hear it as more “financial demands.” When they say “remerchandising,” suppliers hear “labor demands.” When retailers talk about raising profitability, suppliers hear it as “more private label” and “increased efficiency” translates into “more work for me.” Money is the fundamental issue and the root of all misunderstandings. That is unlikely to change. For the industry to move forward, retailers and vendors have to focus on aligning mutual goals, responding faster to customer shopping behavior before and after they get to the checkout and provide a relevant assortment based on real data. These can be the result of a more efficient, less adversarial relationship based on more than just buying and selling. Ineffective relationships simply mean wasted time, energy and resources. What is the ROI on that? The key to all of it is mutual accountability that must be adopted by everyone in the business. Len Lewis, a regular Grocery Headquarters columnist is a veteran industry journalist, commentator and editorial director of Lewis Communications, Inc. He is the author of The Trader Joe’s Adventure—Turning a Unique Approach to business into a Retail and Cultural Phenomenon. He can be reached at [email protected]. Or at www.lenlewiscommunications.com.