The paper shows how the relationships between suppliers and retailers have experienced several important changes over the last decades. By analyzing the main developments of these relationships and the different tools implemented to improve them, the paper argues that the business to business approach to retailing is following the same trends worldwide. Based on two of the largest partners in the worldwide retailing environment, Wal-Mart and Procter & Gamble, the paper illustrates how the buyer's market has gradually resorted to a cooperation strategy between the supplier-retailer relationships. It emphasizes the features of Category Management. Over the last several years, the nature of the buyer-supplier relationship in retailing has been undergoing dramatic changes. Industry observers and researchers have described these emerging relationships as "partnerships" or "strategic alliances," as opposed to the traditional "arm's length" type of associations.
Tags: buyer's market, trade marketing, partnering, category management.
[...] Apart from this, the current evolution of the relationships in retailing has been largely beneficial for suppliers since, between 1994 and 2002, they have gained 5 points in their operational margin whereas retailers gained only 1.5 point. In general, this strategy favours the development of larger suppliers against smaller ones. Thus, suppliers have strengthened their portfolios through both acquisitions and divestments to face the requirements of stronger retailers. For instance, the Anglo Dutch Unilever has reduced its number of brands from 1,600 to 400 in the past four years. [...]
[...] Thus, Trade Marketing is the cooperation between retailers and manufacturers, through the exchange of information, in order to strengthen a long-term relationship. Yet, Randall (1994, p118) underlines that there is not a unique method to applying it. Partnering The US term “partnering”, also referred to as strategic partnership, implies a stronger relationship than Trade Marketing, according to Mentzner et al (2000). Partnering occurs through extensive social, economic, service and technical ties over time (Stern, El-Ansary and Coughlan in Mentzner et al, p549). [...]
[...] and White, H.F.M (1991) “Retail Buyers and their fresh produce Suppliers: a power or dependency scenario in the European Journal of Marketing, Vol pp 40-52. Kumar, N. (1996) Power of Trust in Manufacturer-Retailer Relationships”, Harvard Business Review, November-December 1996, pp 92-109. Lauer, S. (2005), Rivalité accrue entre distributeurs et industriels Le Monde Mc Goldrick, P (2002) “Product selection and Buying”, Ch in Retail marketing, McGraw Hill Education. Mentzner, J. T., Min, S., Zacharia, Z.G., (2000), Nature of Interfirm Partnering in Supply Chain Management”, Journal of retailing, Vol No pp549-568. [...]
[...] This paper analyses the reasons why retailers and suppliers are developing less conflicting relationships firstly in regards to their historic development and secondly in the light of the notions such as Trade Marketing, Partnership and Category Management. The case study of Procter & Gamble and Wal-Mart supports the presentation of the arguments employed in this paper. Defining the relationship between a retailer and a supplier The organisation and development of the buying function in retailing depends largely on the size and structure of the retail operation, as well as the types and assortments of the products sold (McGoldrick p283). [...]
[...] Therefore, consumers assume there is a real difference between personal care products from retailers and manufacturers: they prefer to pay a premium and trust manufacturers' expertise that in other areas they usually do not. As a Category Manager, P & G/Gillette ought to convince Wal-Mart of the necessity to carry its national brands (Dickie et al., 2005) In fact both Wal-Mart and Procter & Gamble/Gillette have had to make an alliance in order to take the most advantages of their situation, reduce costs, and survive in the long-term, in an increasing tougher environment which is believed to become more complex in the future (i.e. [...]
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