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Symbiosis Needed Between Brands and Retailers

BY: ZACH HEAD

MAR. 6th, 2018

The trends of yesteryear are the realities of today, meaning brands and retailers now live in an era where digital affects the physical. Most brands operate their own ecommerce store, but brick-and-mortar remains a steadfast staple of the marketing mix. Consumer goods, clothing, technology, and a slew of other verticals require strong relationships with retailers to maintain their edge. Retailers need dependable partnerships, as well, to succeed in an industry that often suffers from slim margins. So, how can this relationship be leveraged? To answer that, we must first understand what needs to be fixed.

Retailers need dependable partnerships to succeed in an industry that often suffers from slim margins.

THE COMMUNICATION GAP

Most brands (in this blog, brands are considered manufacturers who primarily sell through other companies) receive little information from retailers relating to their products. In fact, only 7% of marketers believe their brand is fully aligned with their retailers. It might make sense that brands and retailers are not aligned. They’re different companies, after all, but the gap has a more harmful effect. Communication often falls through the cracks up and down the supply chain, leading to lower revenues and lost opportunities.

What’s an example of a communication gap? Fifty-four percent of brand marketers say local storefronts lack sufficient marketing education. Effective branding and communication requires a lot of work, but that effort may end up pointless if not implemented at the point-of-sale. While sharing information between enterprises is difficult, the true partnership opportunity lies in creating a strategy around real-time, actionable data shared between retailers and brands. Out-of-stocks (OOS) and overstocks provide the best example of how effective communication can impact the bottom line.

TAKING STOCK OF EXAMPLES

A study published in the Harvard Business Review found that OOS could cost as much as 4% in lost sales per year. For a billion-dollar retailer, that’s a loss of $40 million. A report from IHL Group attributed these losses to a lack of overstock and OOS data, poor forecasting of necessary supply, and underdeveloped relationships between organizations and departments. The reason for this revenue loss? Almost half of customers will not make a purchase at all if the sought-after brand is out of stock. In addition, the OOS increases the likelihood of the other half of customers trying a competing brand.

While there are plenty of OOS and overstock solutions, few of them are easily applied at scale. It becomes difficult to get the right emails in front of the right people, track the thousands of data points, and predict the necessary supply. Addressing this issue potentially offers massive opportunities. The Harvard Business Review offers an example. H-E-B, a San Antonio-based grocer, reduced stock-out rates by 22.5% over eight weeks just by tracking POS data for their fastest-selling items. Implementation of new systems made H-E-B more efficient, but imagine if that data were also shared with the brands they sold. The ordering process becomes automated, ideal inventory is maintained, and brands understand how their products are sold in stores.

OPPORTUNITIES BEYOND STOCK OUT

Precise and consistent measurement is the first step to overcoming OOS and overstocks, but it doesn’t maximize the brand-retailer relationship. Greasing the wheels of communication opens up an entirely new set of opportunities that all point to one thing: increased revenue.

When retailers and brands share data, both companies will see an accurate picture of what is happening in the physical store.

When retailers and brands share data, both companies will see an accurate picture of what is happening in the physical store. Inventory requests can be filled with increased promptness. Brands can develop initiatives that they can ensure will be implemented by the retailer. Both ends of the chain can ultimately collaborate to develop their partnership and ideal outcomes for both parties.

This is where we come in. Our platform, CoEFFICIENT®, automates the data analysis and provides a space for both parties to take action as new information arrives. Joint initiatives and programs are easily managed and kept in a central repository, providing access to all involved. The platform leverages data science to mine historical data, understand trends, and display smart recommendations. CoEFFICIENT can be the connective tissue that allows brands and retailers to work together and optimize their businesses.

ABOUT THE AUTHOR: ZACH HEAD

As a member of our marketing team, Zach helps shape up the content calendar and keeps operations running smoothly. He loves telling stories that entertain, sharing information that engages, and creating content that empowers. Ready to tackle anything that comes his way, Zach’s motto is always, “Absolutely. I’ll give it a shot.” Outside of Square Root, Zach loves to travel and has seen 43 of the 48 contiguous states. An avid basketball player, he describes his jump shot as “picture perfect.” Zach will graduate from the University of Texas at Austin with dual bachelor’s degrees in marketing and radio-television-film in May 2018.