GUEST COLUMN

As supermarket pricing becomes ever more competitive, David Miles, director of The Retail Mind, gives an insight into the pressures facing today’s retail buyers

Why don’t retailers just put their prices up, as we all know there’s a tsunami of cost price increases across wages, transport and raw materials? It’s a question I’m sure many producers frequently ask.

And how are buyers incentivised? Is it just their ability to get lower prices from their suppliers?

Well to answer these questions, let’s trade places and swap into the role of the retail buyer. Then we can understand the challenges, issues and motivations and even have a think about what that means for producers.

The fi rst bit of clarity may come from understanding that, in their retail businesses, buyers are called traders. Everything they buy, they also must sell to shoppers. If shoppers don’t buy it, they have a problem. So how are they measured? Every day the trader knows if he/she is hero or zero. Their main KPI is sales. There’s no let up. Every day the entire business can see how they have performed.

Every month is the same – hero or zero, whether you’ve hit your profi t target or not. Consistent delivery gets you a bonus and to keep your job and is, of course, a big part of career progression, too. Conversely, consistent missing will mean an end to your retail career. It is competitive!

So, the main challenge a trader has is making sure that the products they have bought sell. That delivers the sales and the profi t. If it doesn’t sell, you usually have to mark the price down, missing your sales value and your profi t. Double whammy!

Retailing isn’t rocket science; shoppers will tell you: “Please be in stock of the products I want at great prices in a store that’s easy to shop.” This applies just as well to online stores, by the way.

The priority for traders is getting the product on to the shelf. Availability is vital. That’s under pressure now, as the supply chains are not operating to anything like their previous worldclass best. That’s where great sellers need to focus, ensuring the basics of selling are in place.

Next, the products have got to be great value. That usually means other shops don’t have the same thing at a lower price. Retailers are ruthless about this and have highly sophisticated measurement systems in place that trigger on an hourly basis if their products are priced outside of targets. Milk pricing is a great example. One retailer drops their price, and later that day, others will follow.

The buyer sets the retail price, but a senior exec may drop it. That’s a profi t and a career problem for the buyer!

The fi nal challenge facing buyers is that of knowledge and information. Many buyers are new in role. Faced with a time-poor, highly-pressurised environment, buyers don’t know their industry, category or supply chains, exposing them to real risk. I know this is hugely frustrating for producers, too. Without guidance, it makes decision making risky – for all.

At The Retail Mind, the work we do with supplier sales teams is all around ‘trading places’; getting into the buyer’s shoes, then working on the action plan from there. We have been on both sides of the table and understand how to get the best out of buyers. Make the information simple and easy to digest.

Focus on how well the products sell. Build the buyer’s knowledge over time. Build relationships whilst still being demanding and direct with your own needs.

Be sympathetic but don’t be soft. Choose your battles and fi ght them hard. Hold your ground if that’s what’s needed. If you can deliver the basics, you will get what you need.

For buyers, it will make buyers heroes in their business, but better still, keep them in a job!

David Miles is director of The Retail Mind, a full-service groceries retail consultancy practice. He has over 30 years’ retail and manufacturing experience, as a buyer and seller.