from Grahame Smith, director, Executive Coaching, Exmouth
Devon
Sir; I read with concern the comments on the lack of new product development from your leader and recent letters to the Grocer (‘NPD and the holy widget’, ‘We need real NPD, not just me-toos’, ‘Drinks NPD unwelcome at multiples’, The Grocer, December 4, p24) and the commentary from multiple buyers (‘Tesco attacks brands’ NPD record’, The Grocer, Nov 20, p68-69).
Brand owners should be more effective in persuading retailers through their research that consumers are willing to pay a premium especially on new products. However, the trading issues caused by the intense competition between retailers are many.
n Our top four retailers have required ongoing trade promotion funds from suppliers to fund EDLP, supplemented by promotions requiring more funding, mostly from supplier trade investment budgets
n Retailers strive to maintain the profitability of their major categories in ambient and chilled.Rivals’ price reductions are matched and suppliers ‘encouraged’ to fund the cash margin loss. Supplier price increases are watered down or refused. Some suppliers will reluctantly find ways and means of helping the retailer to maintain category profitability since if they don’t they know they could be penalised
n Increased in-store price promotion erodes brand values
n NPD requires heavy ad support to drive trial. Extra investment in in-store promotion reduces media investment. Less ad support means fewer risks… a self-fulfilling prophecy
n A retailer label is launched on the back of a brand’s successful investment in NPD
Independent grocers are mainly focusing on a tight range of convenience goods so buyers from the big four will use their muscle to gain maximum protection for category profits.
Retailers and suppliers talk win/win, but how can that be in the long term, given the structure of the trade? And why are there so few buyers’ letters on these pages. Don’t top retailers allow their buyers to comment publicly on these issues?
Devon
Sir; I read with concern the comments on the lack of new product development from your leader and recent letters to the Grocer (‘NPD and the holy widget’, ‘We need real NPD, not just me-toos’, ‘Drinks NPD unwelcome at multiples’, The Grocer, December 4, p24) and the commentary from multiple buyers (‘Tesco attacks brands’ NPD record’, The Grocer, Nov 20, p68-69).
Brand owners should be more effective in persuading retailers through their research that consumers are willing to pay a premium especially on new products. However, the trading issues caused by the intense competition between retailers are many.
Independent grocers are mainly focusing on a tight range of convenience goods so buyers from the big four will use their muscle to gain maximum protection for category profits.
Retailers and suppliers talk win/win, but how can that be in the long term, given the structure of the trade? And why are there so few buyers’ letters on these pages. Don’t top retailers allow their buyers to comment publicly on these issues?
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