What retailers can learn from restaurants

The last time you went to a coffee shop or restaurant, how was it for you?

Chances are, the answer is “pretty good”. Your server turned up promptly, read you the specials, brought you drinks and was generally pleasant and attentive. If you ordered food, it arrived just when you would expect, and your dishes were discretely cleared away when you were done. If at any point you felt things could have been better (maybe the food was too spicy, or your latte wasn’t frothy enough), every effort was made to make it right.

Of course, you know why you had such a good experience, don’t you?

One of the big distinctives of the USA over many other cultures and countries is the level of service you can expect when eating out, which comes as a result of a really healthy culture of quid-pro-quo. Both parties – the customer and the server – have something they want and something to bargain with. Good service gets a good tip, and the promise of a good tip is a powerful motivator for those who serve. It’s a great example of a relationship of mutual respect and mutual benefit.

Win-win relationships like the server-customer one result in better, faster service and a better experience for everyone involved. And yet, this kind of thinking is often missing from other industries where it could make a significant difference.

Take the example of private brand retail. Many retailers use supplier organizations to create exclusive products that will only be available in their stores. It’s a very profitable business. Sales of private brand products not only generate excellent margins, they also serve to build customer loyalty. Retailers are naturally eager to keep costs down as much as possible in the production of private label products. Unfortunately, it is very common for them simply to put pressure on suppliers to deliver, with threats of fines or other sanctions if deadlines are missed or specifications are not met.

Instead of treating suppliers like subordinates or second class citizens, it’s actually much more effective to treat them like team mates. In a previous blog, I drew the comparison with how national brands operate; there, the brand manager, product developer and production team are all part of the same company, working closely together. Accordingly, the most successful private brand retailers know that in order to compete successfully it’s important to communicate well with suppliers. Providing the knowledge and tools suppliers are going to need to overcome any obstacles they may face is vital. It’s also important that they feel valued and respected if they are going to be motivated to do their best work for you.

It’s important to say at this point that I’m in no way suggesting that money should be used as a motivator between suppliers and retailers. An investment in changing the way you work with suppliers is much more effective - and much more legal - than attempting bribery. It’s about respect and a collaborative model which provides intrinsic motivation to the people within your supply base.

In short, in an ideal world, retailers and suppliers would enjoy a relationship of mutual respect and openness, where both contribute and both benefit tangibly from their working relationship.

At S4RB, we call this way of working Supplier Engagement. It’s when retailers make the effort to build a nurturing relationship with suppliers for the good of everyone involved. They take the time to communicate clearly with suppliers, to give them the support they need to do a great job, and to be open and transparent about targets and performance. The return on investment for Supplier Engagement comes as a result of the increased quality of those supplier interactions; more gets done in a more timely fashion, and more of it is right-first-time.

Building good supplier engagement results in your suppliers becoming more and more committed to your products, brand values and goals. It affects every interaction with your suppliers. The higher their level of engagement, the more efficient and cost-effective they are, and the more efficient and cost-effective you can be. Engaged suppliers understand what you need from them, and feel motivated to collaborate. They will prioritize your requests, putting your brand’s name at the top of their to-do lists.

Find out more about how retailers can create transparency with their suppliers.

Tags: Customer experience, Supplier engagement

Team S4RB

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