Powering the cycle of success
New era of collaboration between retailer and supplier
It is becoming accepted that the abundance of available customer information and a data-driven approach to decision making support the development of a productive relationship between retailers and suppliers. However, the concept is taking on a whole new significance as the industry begins to recognise that collaboration really takes off when it moves from ad hoc projects to an ongoing strategy to identify broad category opportunities.
Regularly sharing insights, changes and trends across an entire category inspires more than just general assortment decisions – bigger, ambitious ideas on, for example, new products to address customer trends and shopping behaviour; or major merchandising proposals for activation in store clusters.
This constant cycle starts with the common goal of category growth. From a central data platform, both parties can uncover opportunities from trends; new need units; and changes in segmentation or customer behaviour. By making the best possible use of the available insights, detailed analytics support successful customer driven initiatives which can be piloted in a group of control stores. The level of success can be measured in terms of the effect on the category, which, in turn, powers the cycle once again.
All the right ingredients
Changing shopping behaviour and patterns in terms of the type of products purchased, presented all the right ingredients for a successful collaboration between a European retailer and a detergent manufacturer. The supplier saw the opportunity to optimise shelf layout; and the retailer was keen to accelerate category performance. Two different perspectives of the same issue, which together would deliver a good balance between customer focus and driving sales; and an exceptional shopping experience.
The customer insights data provided by emnos allowed both retailer and supplier to regularly analyse category performance. Consequently, they were able to identify an early change in behaviour towards new product formats (liquid, powder, tablets) and sizes. emnos supported both parties by structuring and leading the project: providing detailed analytics using clustering techniques; analysing potential effects on various merchandising options; and evaluating the test store impact. Initially this led to shelf layout optimisation but also opened the door to new product ideas to address the evolving needs.
This project met the expectations of the retailer with 3.9pts category growth; and the supplier with 14pts market share growth.
What makes collaboration fly?
There are surprisingly few key components to such a prosperous, co-operative strategy but they are critical. Firstly, all organisations concerned need to embrace the value of data driven insights; and share category growth as an overall objective. They need to work through a common insight platform and establish clear processes, roles and responsibilities.
It is also important to start with a definite idea of what you need to achieve with the data, otherwise you may invest in mining vast quantities when only a small percentage is actually useful. Loyalty cards are an accessible and rich source of highly relevant information on your customers. When this data is analysed, it can deliver startlingly in-depth insights into shopping behaviours and help you produce solid, business recommendations.
Lenta, one of Russia’s largest retail chains, and global retail experts, emnos, joined forces to discuss the value of both retailer/supplier co-operation and loyalty card data at this year’s ECR Forum in Moscow last month.