A lack of trust can damage even the best relationships – personal or business – and retailers and suppliers are feeling these growing pains on a regular basis as they look for more ways to collaborate. Creating a shared understanding of goals is the first step in a long journey that includes data integrations, negotiations and plenty of back and forth. Cross-channel partnerships are key to providing shoppers with the seamless experience that they demand, yet there continue to be barriers to true collaboration between organizations. Establishing trust on the retail level, however, can help facilitate collaboration and improve sales and revenue throughout the supply chain.
Building value in the retail supply chain begins with a shared understanding and organizations who are committed to executing best-in-class marketing ideas. These joint business processes allow retailers and suppliers to enhance their individual success by deepening their relationships and hitting shared milestones at times of the year that makes sense for both parties. Shared planning activities are a crucial first step to building trust and achieving operational success.
The Power of Trust Between Retailers and Suppliers
Build trust or anticipate challenges. While 47% of supplier collaborations fail due to a lack of trust between individuals and organizations, this high failure rate may make it difficult to justify entering into another collaboration. What this doesn’t speak to is the positive impact it has on shoppers when 53% of these partnerships work – resulting in increased sales and improved metrics for both organizations.
What does trust look like between organizations? Think about any successful partnership or relationship: each party must rely on the other to have their shared best interests in mind. As soon as one party believes that the other is becoming more internally-focused, communications begin to derail. And shoppers are the big winners with exceptional collaboration, as suppliers with intrinsic knowledge of customer trends are able to prep and ship adequate quantities of stock.
What Hinders This Trust?
Customer and sales data are typically guarded by product managers, but is this still the most efficient method of doing business? Retailers and suppliers continue to keep each other at arms’ length, limiting their ability to truly be successful. Mark Baum, SVP of Industry Relations and Chief Collaboration Officer at Food Marketing Institute, once noted: “The need for collaboration — on a micro and macro scale — is greater than ever.” When suppliers have a solid overview of shopper behavior, for example, they are more likely to be aware of new products and services that could be offered.
Unfortunately, retailers and suppliers have a long history of focusing on their individual self-interest. It is this type of behavior that erodes trust between the organizations and limits the overall effectiveness of any partnership. Although collaboration between these groups is still in its infancy, a keen focus on building trust can spark cultural change, resulting in shared data, joint sales forecasts and collaborative planning.
Setting the Stage for Trust
Building trust is a proactive practice that requires buy-in throughout the organization. While difficult, these steps are not impossible and can have an exceptional payoff in terms of improved shopper engagement and sales. Walmart is leading the charge by making its analytics hub, Data Café, available to all suppliers at no cost, and in turn, fostering trust. This innovative move allows suppliers to gain insight into shopper demand, assess campaign conversion rates and optimize their supply and inventory management.
Furthermore, both Walmart and its suppliers are able to leverage the sales data to create marketing solutions and optimize advertising potential that benefits both parties.
Tips for Building Trust
Sharing insightful data and promotional activities mean that both Walmart and its suppliers are able to see the real-time impact of their partnership. This creates a powerful incentive to continue their collaboration as they can see what is or isn’t working in nearly real-time. Based on the example above, some tips for building trust include:
- Sharing real-time POS and inventory data to allow suppliers to plan for future demand more effectively. In the example, suppliers are able to access Walmart’s Data Café, and adjust their processes and strategies to optimize inventory and enhance the shopping experience across all channels.
- Sales tracking to provide each organization with the input that they need to justify their partnership to leadership while setting the stage for future collaboration. The teams need to define which promotional activities are driving sales, and which can be paused or reworked.
- Encouraging promotional teamwork that amplifies the impact beyond what either a supplier or a retailer could achieve alone. By “speaking the same language,” retailers are able to avoid stock-outs and more tightly manage their inventory levels for specific items of interest to their core demographic.
As retailers and suppliers commit to building trust through activities like data sharing, sales tracking, and joint promotion planning, it only stands to reason that collaboration will soon follow. By keeping shoppers in mind – the true winners in collaborative retailer-supplier relationships – each organization can expect to see clear benefits from a trusted partnership.