of my market and what my stores look like. Forty percent of my potential new customers are over age 55. You know, if we really worked together on this, we both stand to gain. What products can you bring me, what products can we jointly develop, that will appeal to this target market?”

 

As a supplier, you can make the same proposal to a retailer.

 

In short, think value –– not cost. Today, there are a host of value drivers –– areas where you can partner to improve performance –– manufacturing, marketing, new item introduction and performance, retail shelf and displays, customer service, finance, logistics and more.

 

As these opportunity areas are identified, the relationship becomes broader, deeper and stronger. It grows beyond the traditional sales rep / buyer relationship, and becomes cross-functional. Each company begins to look at all components of its organization, and at how the two companies can work together in multiple ways.

How to Segment for Strategic Partnering

As we have said, all trading relationships are not equal. So, how do we segment our trading relationships, and what do we do for each segment?

 

A matrix segmentation is illustrated in Chart 5, “Strategic Retailer Partnerships / Program Architecture …” Such a matrix may seem simplistic, but it is key to driving home to your organization that not all trading partners are the same, and to maintaining focus. An organizing principle such as the matrix helps delineate the boundaries, and clearly says that some are more important to achieving your goals than others.

 

This supplier, for example, segmented on volume and profit –– an obvious, foundational differentiator –– as well as alignment with its own strategy and standards. The former is objective and easy to measure, the latter somewhat subjective.

For many suppliers, a strategic partner will be Wal-Mart, Kroger, Safeway or other major chain, or a strong, innovative regional player like Wegmans.

 

For many supermarket chains, a strategic partner might be a Procter & Gamble, Unilever or Kraft, a company that brings major national brands and large resources to the table. For an operator such as Whole Foods, the criteria will be very different –– upscale, organic, health or “green.”

 

In other cases, the criteria may be something else again. For example, one retailer with whom we have worked does great volume in alcohol –– but does not desire strategic partnership programs with major brewers. Essentially, it is uncomfortable marketing alcohol, and therefore puts its alcohol suppliers in a “tactical” bucket; brewers and other alcohol suppliers simply are not considered to be in alignment with the retailer’s overall positioning strategy.

 

For a retailer seeking to differentiate itself via innovation, a strategic partner might be identified as a supplier–– even a very small one –- that is producing a stream of interesting new products with appeal to the retailer’s target market.