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Key Strategies to do Business With Supermarkets


Throughout the history of retail, there have been constant changes in the ways we have worked to negotiate products between retailers and suppliers-producers. Until practically the last decade of the 20th century, it was the suppliers who, in order to do business, imposed themselves with their commercial and price policies on the supermarkets themselves, which, because they wanted to have all the variety of well-known brands in their stores, yielded to the big manufacturers .

Since the end of the 90s and until practically a few years ago, this trend to do business changed abruptly to the opposite: the supermarket chains are those that have been imposing their conditions on the suppliers and, in case of not accepting them, they removed them from the shelves, regardless of the brand.

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This change to do business also coincides with the growth of private brands in all US supermarkets, including Hispanics.

Since about two years ago, the negotiation techniques of buyers, which more and more retailers are incorporating, are those of trust and transparency between both parties, traditionally known as the “Win-Win”.

In this sense, manufacturer and buyer put all their cards on the table to do business, with a common goal of going to market with a product, price and unique and competitive service.

The buyer is traditionally the one who negotiates prices and conditions, also who chooses the products and the assortment that should go to the store shelves. But in more and more supermarket chains this is changing, because it is not appropriate to be “judge and party” in these decisions.

That’s why the incorporation of a Department of Assortments in retailers is coming strongly to the stores. Those responsible for assortments are those who receive all the requests to incorporate products into stores.

After carrying out the analysis of the categories, such as the number of products already owned by the family and comparative with the competition, they decide if they will enter the new product and pass this information to the buyers, who are in charge to negotiate the introduction and then sign the conditions of that product.

What Steps Must You Follow to do Business

To begin the negotiations of introducing a product, we must establish a strategy, always putting ourselves in the place of supermarkets, which are those who work directly with customers.

We will apply a strategy of competitive differentiation with a single product and service, oriented to a niche market, so that it stands out from the competition. To do business, it is never convenient to have the lowest prices, since it would be a “war” where there is always someone cheaper.

If your ability to negotiate the purchase of raw materials or other items is less compared to your larger competitors, you will have the opportunity to reach strategic agreements with the supermarket chain.

These new practices of retailers to do business benefit both parties, as they can help producers to acquire raw materials with better conditions both to develop their private and exclusive brands.

Related Article: Prepare Your Retail Business for a New Decade

It is essential to be clear about the total costs to negotiate. It happens quite a lot that, when selling, some suppliers lose money because they do not add all the costs, but only include the direct cost of the product.

At the moment of being in the negotiation process, establish the conditions, including aspects such as what will be the promotions in which they will have to support the stores, be prepared for new, fair and modern techniques to do business, those of total transparency in both parts.

In short, the secret of success for our products (manufacturer-retailer) to sell quickly in supermarkets is in the union of forces of all parties to do business, resulting in a competitive and unique product for our customers.

If you are a supplier or manufacturer and visit a buyer who uses old techniques such as asking for financial compensation for introductions or other elements that remain in the prehistory of the retail, do a favor to the entire sector and give up entering that game.

Very close to that retailer there will be another one waiting for your product and it will be completely transparent in its operation to do business.

It is everyone’s responsibility to let us correctly advance and modernize our fantastic world of supermarkets.

About Julio Ibañez

mm
Retail Executive, specialist in Supermarket Management and Big & Box formats. Consultant and international speaker. President of the Hispanic Retail Chamber of Commerce of the United States.

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