Next-Generation Collaboration: The New Frontier of Shopper Value and Industry Growth

A number of trends are converging to create a new market reality for consumer goods companies and retailers.

Product life cycles have grown shorter. Store sizes have grown smaller. Retail competition has intensified—driven largely by new entrants. And distribution channels, as well as the pool of global suppliers, have proliferated.

Perhaps most significant is the growing and unpredictable demand among a more fragmented base of shoppers for new products, channels and personalized services. Shoppers’ preferences are evolving at a fast pace. So is their reliance on social networks as channels of massive peer interaction and influence; their adoption of mobile and smart technologies; and their desire for price transparency and information—typically through online channels—that will help them with their purchasing decisions.

These trends present significant opportunities for traditional retailers and manufacturers to enhance shopper engagement. But they also pose considerable challenges and pave the way for new entrants.

Taking a deeper look into the operating truths of the packaged goods retailing industry reveals a number of specific issues that are reinforcing the cost structure. At the same time, these truths clearly identify opportunities for better serving the shopper with products they want, at a competitive price and with comfortable margins.

• Excess and incorrect inventory
• Ineffective product development.
• Irrelevant assortment
• Saturated space and outlets
• Off-target promotional and marketing investments.

As these truths illustrate, collaborative relationships make good business sense for retailers and suppliers, alike. That is because both groups face common challenges that collaboration can help resolve. And by working together, both groups can identify new opportunities for growth and potential sources of additional value.

The four joint partner capabilities, which are defined by and aligned to an overarching unified strategic business plan, represent those areas in which retailers and suppliers can come together to unlock value and strengthen shopper engagement. They are:

• Tailor innovation by jointly developing products that will cater to the needs of a more fragmented set of shoppers for whom “mega-brands” hold less appeal.
  
  
• Drive demand by delivering more tailored promotional offers, optimizing assortments and investments, and integrating channels.
  
  
• Manage supply by planning together and integrating inventories to improve in-stock positions and make the right product available for the shopper at the right time.
  
  
• Assure execution by sharing data, right-sizing assortments, and better managing the ever-growing number of distribution points.

Three foundational platforms have evolved over the years to now underpin next-generation collaboration. These platforms not only support the activities and processes of the joint capabilities, but also enable those capabilities to scale and become sustainable.

• Business planning and analytic engines
• Integrated data sharing platforms
• Collaboration commerce hubs