There is limited scope for small suppliers negotiating! At Mr Crumb we have two perspectives, first from being well established in Ireland and, second, being a new entrant to the UK. For a new supplier, the multiple tells you what margin they require. There are standard category margins that a manufacturer must be able to meet. However, multiples do realise there is a balance to be struck between meeting their own requirements and allowing the manufacturer enough margin to operate.
Negotiation comes into play once a product is established. As sales grow, the multiple will look for an increased investment (whether through extra margin, promotions, etc) and you usually have to give something. Eventually there can only be one of two outcomes. Either the manufacturer will not have enough margin left and close, or will continue through innovation (via new products or repositioning existing ones).
Susie Willis MD Plum Baby
The ability to negotiate with suppliers comes down to an honest approach to base costs. There is always the belief that a multiple grocer will never give anything away, but if there is genuine perceived value to their category then there is room to negotiate. It is important for a small supplier to stand by its guns when it comes to price, margin and price promotions. Never be bullied: your cost base is what it is. It is also important, however, to demonstrate the desire to work together as partners, and reach a compromise on marketing costs to get the brand recognised.
Once the buyer has trust in your brand and its ability to perform then you are in a stronger position to negotiate extra distribution and further shelf space.
Relationships matter, keeping close to the buyers makes a difference. Once the buyer understands that the marketing budget is in fact the owner's mortgage repayments, they then tend to be more understanding.
Negotiation comes into play once a product is established. As sales grow, the multiple will look for an increased investment (whether through extra margin, promotions, etc) and you usually have to give something. Eventually there can only be one of two outcomes. Either the manufacturer will not have enough margin left and close, or will continue through innovation (via new products or repositioning existing ones).
Susie Willis MD Plum Baby
The ability to negotiate with suppliers comes down to an honest approach to base costs. There is always the belief that a multiple grocer will never give anything away, but if there is genuine perceived value to their category then there is room to negotiate. It is important for a small supplier to stand by its guns when it comes to price, margin and price promotions. Never be bullied: your cost base is what it is. It is also important, however, to demonstrate the desire to work together as partners, and reach a compromise on marketing costs to get the brand recognised.
Once the buyer has trust in your brand and its ability to perform then you are in a stronger position to negotiate extra distribution and further shelf space.
Relationships matter, keeping close to the buyers makes a difference. Once the buyer understands that the marketing budget is in fact the owner's mortgage repayments, they then tend to be more understanding.
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