What Do Supermarkets Want from Suppliers?

Well, the cynical might say silly question, its all about lowest price. And indeed there's no getting away from the fact that supermarkets negotiate very hard - to put it mildly. But there are other factors which supermarkets take into account when deciding whether or not to work with a supplier.

According to the Institute of Grocery Distribution (and apologies for mentioning them again, but they do publish some helpful data), retailers' top requirements from their suppliers are as follows:
New product development and innovation, and consistently high service levels, mentioned by 72% of retailers questioned
Understanding the retailers strategic direction, mentioned by 67%
In depth understanding of the category and its future trends, mentioned by 61%.
These four requirements were rated well ahead of any others, with the next highest ranking, mentioned by 47%, being a need for suppliers to have dedicated teams managing the relationship.


It's interesting to see the emphasis put on innovation and understanding future trends. These skills are vital to retailers who are extremely competitive with each other, and all hell bent on attracting more shoppers and growing their business. Retailers recognise that price alone is not enough to do this.

The high priority given to service, ie having the right product on the shelf all of the time, is also key as nothing frustrates a shopper more than finding that the product they want is out of stock. Often they will either not purchase at all, so business is lost, or worse still go to another store.

The IGD also draws attention to the importance of an efficient supply chain, as this is a way for retailers to get costs down. However they can't do this on their own, and are more likely to support suppliers with whom they can partner in an effort to reduce supply chain costs.

So, for those thinking about dipping a toe in the supermarket supply water, its all about new ideas and the ability to implement them effectively with top class service. For those who do not deal directly with supermarkets, but supply processors or packers who do, its worth remembering that they are judged by their ability to innovate and supply efficiently. The producers who help their processor/packer customers either innovate or become more efficient may find extra profit in their pockets.