In Australia, supermarkets have been very vocal about their ongoing range rationalisation lately, announcing up to 15% range reductions, and now there are calls by suppliers and manufacturers for the Australian Competition and Consumer Commission (ACCC) to step in and hold supermarket giants Aldi, Coles and Woolworths accountable under the code of conduct. Under the code, which came into full effect this year, supermarkets can only delist a supplier’s product for genuine commercial reasons and must give reasonable written notice.
While I empathise with suppliers and manufacturers over the way the supermarkets may be going about this, I also think that this is not unlike what has happened in the taxi industry with UBER. Like the taxi industry, the market has decided that change is necessary and the incumbents have failed to recognise this or have ignored it for too long, electing to continue with the status quo.
I have little or no sympathy for any supplier or manufacturer who has concern about what is happening in the supermarket channel, when they have ignored the opportunities in other channels or failed to implement an ongoing new business strategy to insulate themselves against these very situations. It is too late to start crying over changes in an industry or business that you have invested all of your sales and marketing activities around, because you thought they were the market, and then when the axe falls, expect regulators to step in and protect you. Sound familiar?
Our business works with suppliers looking to develop solid ongoing new business acquisition strategies, and it is stunning the way some suppliers and manufacturers view and treat the greater independent channels. In the past two years I have been an advocate for giving suppliers a voice and retailers a choice when it comes to new products for their business. I have talked to many suppliers at trade shows about our program only to be met with typical objections about how niche their product was while we were standing in an event that had anybody and everybody passing by, or boasting about how they had taken large orders from their existing clients, in effect mortgaging the next 3 months sales with that client, or to suppliers who freely admitted that they had only talked to 12 retailers in the past 2 days, who had previously knocked back the opportunity to put their product into the hands of over 400 of our genuinely interested retail members.
The reality is that for far too long suppliers have had this attitude of dealing with the 20% of the market that makes up 80% of the sales, and ignore the greater majority. These same suppliers have over-invested in these sectors, year in and year out because it was easy, and they planned their entire business growth strategies around them, at the expense of the greater majority, and now they are faced with the prospect of loosing large chunks of volume and sales with no long-term strategy around how to attract new sustainable and diverse business.
In my experience, and after two years of listening to the objections, I have come to realise that while most suppliers and manufacturers are great at servicing existing business, they have little or no strategy around new business acquisition. If it happens it is generally because of good luck rather than good strategy.
We are living in a world of people power and majorities that are sick and tired of how they are being treated by the establishment… just look at what happened in the recent US elections. So if suppliers and manufacturers want to rely on industry bodies to protect them when they should have been investing in new business opportunities at a time when business was good rather than bad, good luck!
Craig Matthews is the MD of Stock Box, with over 30 years industry experience in retail development, specialising in independent retail programs.