Book description
In the perennial tug of war between manufacturers and retailers, retailers seem to be winning. Today’s retail industry is more concentrated than ever — in many industries and markets, a handful of retailers account for a majority of the sales. Their ability to control market access and influence consumer buying behavior means that manufacturers need retailers more than ever. And just imperatively, the authors argue, they need to understand what makes retailers tick. As retailer influence has grown, they note, power has moved downstream. For example, Wal-Mart’s sale are approximately 4.5 times greater than those of its largest supplier, Procter & Gamble. Consolidation and the global scale of retailers have reduced the number of “buying points” that manufacturers can develop. Yet neither side is satisfied with the current system. Many retailers have difficulty converting trade promotion into profits. Rather than building longer-term partnerships with suppliers and nurturing store and shopper loyalty, retailers tend to compete on price and fritter away the trade support they extract from manufacturers. What can be done to improve the situation? While manufacturers are locked into large fixed investments and wedded to products and brands with long payback cycles, retailers have a variety of ways of making money. The particular approach, or the mixture of approaches, that a retailer selects defines the retailer’s business model and how it differs from competitors. The article highlights four different retail business models, as exemplified by Tesco, which connects with consumers through its loyalty program; Loblaw, which relies heavily on private labels; Costco, which gets its suppliers to finance its inventory; and Wal-Mart, which focuses closely on margins.Product information
- Title: Rebuilding the Relationship Between Manufacturers and Retailers
- Author(s):
- Release date: January 2013
- Publisher(s): MIT Sloan Management Review
- ISBN: 53863MIT54218
You might also like
article
Models of Intellectual Property Collaborations Between Mature and Emerging Market Companies
We have observed there are five viable and valuable models for IP management and monetization: IP …
book
The Economics of Food: How Feeding and Fueling the Planet Affects Food Prices
Over the past two years, food prices have soared -- and plummeted. As crops are increasingly …
article
When Customers Help Set Prices
For most companies, pricing has always been a sensitive, private affair. This article is directed at …
book
The Differentiated Workforce: Translating Talent into Strategic Impact
Do you think of your company's talent as an investment to be managed like a portfolio? …