Dechert-Hampe: Vendors Need Shopper-Centric Focus

Discussion
Apr 05, 2012

Dechert-Hampe Consulting’s Sales Force of the Future survey concludes yet again that manufacturers’ account managers should be doing a better job getting to know their retail customers’ business. After four iterations covering more than an eight year span, the central theme of the findings remains much the same — manufacturers and retailers just don’t see things the same way.

In the report, Dechert-Hampe wrote: "Manufacturers value attributes that tend to address being a more effective brand advocate. Retailers emphasize the importance of attributes that more effectively address their unique shoppers’ needs."

For example, two attributes ranked particularly high by retailers — Category Knowledge, at two, and Shopper Insights, at three — were missing from the manufacturer’s list of top-ten attributes altogether. Dechert-Hampe said this suggests that while many manufacturers have set up Shopper Insights groups within their companies to address this evolving area of focus within the retail community, "apparently manufacturers’ efforts are still catching up to the resources needed."

On the other side, while manufacturers ranked Understand/Use Data as critical, retail input suggests that more can be done to bring such insights to bear on category development. Wrote Dechert-Hampe, "Understanding trends is a very important task, and one that manufacturers spend a lot of money on, via the syndicated data companies. But turning such data into Category Knowledge that can be shared is very important to retailers as indicated by the #2 Retailer ranking."

When asked to rank the top rated attributes for the future, manufacturers and retailers were closer in agreement. Most of the top five retailer attributes for future importance are also on the manufacturers’ list. So, again as in years past, the industry seems to be better at agreeing on what will be needed in the future than it is on agreeing that the time has come.

Dechert-Hampe concluded that what retailers are looking for most from account managers is help generating shopper demand. Wrote Dechert-Hampe, "Retailers expect account managers to know their own company’s capabilities and resources well and to be able to access them in support of the retailer’s business. But it is also clear from the survey results the retailers expect account managers to understand the retailer’s business, how it works, how it makes money, and what makes it successful. Account managers with a customer-centric approach, armed with shopper insights and a plan to drive sales, will have a leg up."

Discussion Questions: Are the findings of Dechert-Hampe’s study simply a reflection of manufacturers’ and retailers’ inherent paradigms? Is trying to close this gap in anything other than the rhetoric of the future simply a bridge too far? Ideally, how should account managers’ relationships be evolving for the benefit of both sides?

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17 Comments on "Dechert-Hampe: Vendors Need Shopper-Centric Focus"


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Dick Seesel
Guest
10 years 1 month ago

As far as collaborative planning between retailers and vendors has moved in the past decade, there is still a disconnect. (See the gap in rankings of “strategic thinking” between retailers and suppliers.) There may never be a complete meeting of the minds, but there is plenty of opportunity for both sides to recognize mutual interest and gain. The distrustful, adversarial relationships of the past need to become “history”…especially as industry consolidation on both sides of the table becomes a fact of life.

Mark Heckman
Guest
10 years 1 month ago
Aligning the priorities of brand and retailer has been almost as problematic over the years as getting Democrats and Republicans to agree on a budget. Both seem intuitively reasonable objectives, but distrust, narrow focus, and short-sightedness are among the road blocks that continue to plague both processes. On the other hand, I have written on several occasions that I feel the environment for aligning the stars has improved. It is the shopper that is driving the need for brand-retailer alliances in that retailers need “content” for their many initiatives and brands need the customer data that retailers have collected. Now, more than ever, new technology and elevated shopper expectations are driving the need for cooperation. For those retailers large enough to have dedicated brand-funded account managers, they have a responsibility to open up their system to the account manager and allow access to information, category management and merchandising strategies, and other critical elements of the retailer’s operation. In turn the account manager must become a student of the retailer’s business, understand the needs of the… Read more »
Joe Nassour
Guest
Joe Nassour
10 years 1 month ago

Retailers and manufacturers have a lot of common goals but at the same time there are far different issues to deal with. Manufacturers have issues associated with multiple accounts and channels, competition for space in their categories and supporting promotions at a significant number of retailers. Retailers have issues associated with a large number of SKUs in multiple categories, Attracting consumers to shop at their stores instead of the 9 other stores they shop at. Tying to keep prices competitive, their stores attractive, and their customer experience positive.

Having said that, it is very important that they focus on where their interests intersect. Some of the important things to focus on include alignment of category objectives, and communication both within their organizations and inter-organization.

By focusing on common interests they both can increase sales and make the shopping experience pleasant for the consumer and increase sales.

Herb Sorensen, Ph.D.
Guest
10 years 1 month ago

The relative lists represent the serious disjoint between the two businesses. I note that “planning skills” rate highly for both, but this is a generic issue that means VERY different things to retailers than to their suppliers. Retailers citing “category knowledge” and “shopper insights,” is NOT because these are retailer strengths, but because they think this should come from their supplier partners.

The reality is that the retailer uses their store to drive traffic, and looks to their supplier “partners” to provide the profits. The principle focus of the supplier is to beat their competition in the aisle. The shopper is only a utility that plays in these two scenarios, not what either are about.

Matt Schmitt
Guest
10 years 1 month ago

Also notable in absence from the manufacturers’ list are in-store marketing and retail merchandising. This is surprising, given all the talk about shopper marketing as a big focus for CPG brands. Putting themselves in the boat with the merchandising teams at retail is still something of a sensitive, and therefore cautious, approach for account managers.

Ian Percy
Guest
10 years 1 month ago

This is a very old, self-inflicted wound and it’s highly unlikely either side will learn from this study or any other. Most barely learn anything from absolute failure.

I know this is an oft repeated tape from me, but success comes as a result of the ALIGNMENT of the resources. We know that from physics. The best components (manufacturing, distribution, sales, etc.) will get you nowhere if there is no alignment between them. Average components that align their energy will beat them every time.

Top-drawer components who understand the power of alignment are unstoppable. That’s just the way it is.

Kenneth Leung
Guest
10 years 1 month ago

The key is trust and successful case study metrics showing that having visbility from “farm to fork” benefits both parties more than the current adverserial relationship where each side gives as little as possible to get the maximum squeeze from the other side. Most of the case studies you find today seem to be one sided towards growing the manufacturer or the retailer side of the equation.

Roy White
Guest
Roy White
10 years 1 month ago
For starters, suppliers and retailers do live in entirely different worlds with different goals and a different environment in which they function, so there is a gap and it’s not going to go away. Retailing is an industry of detail: The average supermarket can carry up to 50,000 unique SKUs. Manufacturers deal with a much more finite universe. So, it is no surprise that retailers currently value planning expertise most highly because, quite frankly, their lives depend on good, smooth operations; something that takes a lot of work to achieve. The same is true of why retailers highly value category knowledge and shopper insights, because these are the areas of expertise that directly bring customers into the store to make purchases. For these reasons, strategic thinking tends to lag in importance in the retail psyche. Retailers are in direct contact with consumers, while manufacturers are generally not (although websites with recipes, tips and promotional offerings give manufactures today more direct contact with consumers than ever before). It would seem important that suppliers take the initiative… Read more »
Dennis Serbu
Guest
Dennis Serbu
10 years 1 month ago

I always look forward to this report. It is amazing how the disparities grow year over year. It is like manufacturers are from Mars, retailers are from Venus.

Great report, excellent resource.

Gordon Arnold
Guest
10 years 1 month ago

It is apparent from this report that the two entities rarely, if ever, attempt to establish a uniform market plan. From my observed perspective, the difference in priorities is so great in this report that it suggests there is a large variance in the definition of each value. Nevertheless, the differences by any understanding clearly demonstrate how ineffective the two sides are at communicating. This communication problem will surely have an effect on the goals of everyone as in retailer, manufacturer and of course, the customer.

Dave Wendland
Guest
10 years 1 month ago

It wasn’t terribly long ago that manufacturers brought shopper insights to retailers and shared their wisdom regarding assortment, shelf navigation, and consumer preferences. Today, many retailers have far more information about the specific customers shopping their stores. This creates an interesting dynamic that requires more transparency, solid joint business planning, and open dialogue about account-specific action plans … in other words, ALIGNMENT.

Ralph Jacobson
Guest
10 years 1 month ago

These “sister” industries have had these challenges for decades. Nothing new here. I would challenge the article and study to find similarities in the nomenclature of the CPGers and Retailers. For instance, #4 on the CPG side, “Consumer Knowledge” may be the same thing as #3 for the Retailers, “Shopper Insights”, and so on with some of the other items on the lists.

Collaboration is indeed getting more effective and the sharing of data, now “Big Data” is on everyone’s radar. There are also paradigms that linger in this business and some of the more innovative companies are breaking new ground. Some CPGers are simply circumventing the retailer by going direct to consumer. However, that won’t solve the majority of these issues in the long term.

Account managers need to offer services that respond to their business partners’ needs. Simple, but just not easy, right? Oh, and I just called the CPGers and Retailers “business partners”. Do you think they actually look at each other as partners?

Verlin Youd
Guest
10 years 1 month ago

It appears that the gap that does exist may be getting smaller over time. The gap is likely to remain as retailers and manufacturers, for all their commonality, will continue to have different business objectives and incentives.

This gap seems to be causing both parties to branch out further into each other’s territory as they perceive the benefit/cost of doing it themselves to be greater than the cost of addressing the gap. For example :
1. Private label products continue to grow across most retail segments as retailers recognize the sales/profit opportunity of becoming their own CPG;
2. Manufactures exploring new direct retail channels as the costs of interacting and delivering to the end consumer dramatically decrease with the use of web technologies and more cost efficient delivery methods.

Bottom line, both retail private labels and manufacturers going direct to consumer will continue to grow based on the inability of both parties to bridge the gap.

M. Jericho Banks PhD
Guest
M. Jericho Banks PhD
10 years 1 month ago
The D-H report is timely and informative, documenting the small movements in a classic relationship that resists change while claiming to embrace it. Their analysis and conclusions should attract manufacturers and retailers interested in customized “next step” plans to address these findings. I’d be interested in a couple of additional drill-down issues: First, what part do brokers, i.e., non-manufacturer-funded account managers, play in this dynamic; and second, when retailers and manufacturers use the word, “customers,” do they mean the same thing? In other words, are retailers the manufacturers’ customers, while shoppers are the retailers’ customers? In an example of a retailer reaching out to manufacturers to bridge this gap, Meijer did just that some years back when I consulted for them. They hired me to develop a plan to attract the manufacturer promotion dollars that magically became available at the ends of sales quarters to help brands meet their goals. Vexing to Meijer was the practice by several manufacturers to bypass them and other dominant chains in favor of the #2 competitors in those markets.… Read more »
W. Frank Dell II, CMC
Guest
10 years 1 month ago

Retailers and manufacturers have been talking past each other for years. This study confirms ECR was a bust as the same problems exist today. Manufacturers view the retailer as a non-controllable variable between themselves and their consumer. Manufacturers are only concerned with selling their products to their consumers. Retailers are concern with selling all they can to their consumer.

Fact is, not only have we not moved the needle on this issue, it is about to get worse. As retailers’ Private Label share increases, they are direct competitors to the branded manufacturers. Increase share brings increase knowledge.

Christopher P. Ramey
Guest
10 years 1 month ago

The differences are a strength; they create balance and discussion.

Ken Dailey
Guest
Ken Dailey
10 years 19 days ago

I see strategic thinking and planning skills as one and the same. Retailers are always planning in a strategic way to allocate their total store floorplans to match up with current and future competitive and demographic changes. Stores are relocated or remodeled. Manufacturers think of assortment planning as strategic. Retailers think of total store planning as strategic. Assortment planning is from line review to line review … Store planning has to take into account future demographic changes, gentrification, and competitive environmental changes. Tough to delist a store if you make a mistake.

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