Distinctive capability of suppliers and retailers creates extra value

12 Apr 2023

Instead of just focusing on (low) price and (high) volume, it is becoming increasingly important to invest in distinctive capability. But what does this mean?

Now more than ever, retailers are struggling to keep their stock – particularly a wide range of products – up to speck. ‘Instead of just focusing on (low) price and (high) volume, it is becoming increasingly important to invest in distinctive capability. This applies to retailers as well as their suppliers,’ say Koen de Jong and Paul Stainton of IPLC, an international consultancy firm focusing on retailers and suppliers.

Partnerships between suppliers and retailers encourage a value increase

Where do you start when you wish to add value? As a supplier, you can start a new partnership with retailers for example, to share specific market knowledge and current insights. This inside information gives retailers a head start on their competition, allowing them to increase their sales. Therefore, retailers will not only come back for the high-quality products of suppliers, but also for their specific knowledge and experience.

It also works the other way round when retailers share information based on their experience. This information can encourage suppliers to start developing innovative products. Sharing individual information and stimulating transparency within the supply chain contributes to sustainable relationships that benefit every party involved.

Inside information for innovative product development and specific sales

It is important that all parties within the supply chain are continuously aware of the latest developments. Both from the suppliers’ and the retailers’ perspective as well as their consumers. These new insights and impulses stimulate a new vision, innovative product development and specific sales. These are crucial elements when increasing the value of (existing) products. Because, if value is only reflected in a low price and high volume, your profit margin will start to decrease. Leaving you with nothing or, even worse, ultimately resulting in a negative balance.

Constant focus on low price and high volume decreases value

Such a standstill is currently visible in the meat sector. Even though pork counts as the largest category in this sector, it also is the least profitable when compared to other categories and consumers value it the least. Through continuously focusing on price and volume, this trend will not change any time soon. That is why we need to look at the product as well as the market differently, to determine where extra value can be added.

Another example that nowadays focuses on ‘lots for less’ are the blueberries in the fruit and vegetable sector. Even though these berries were considered a luxury product before, suppliers and retailers have been marketing them as bulk product in recent years, while promoting low (retail)prices. Here too volume and price were considered the most important factor while origin – aka production outside the EU – was not, nor was sustainability.

Win-win situation where product value increases

To really make a difference as a supplier and retailer, clear communication is crucial. Not only towards consumers, but also towards each other. Though sharing individual information, products will ultimately meet the current market demand more accurately. This allows suppliers a guaranteed sale of their products while retailers can get a head start on their competition. A win-win situation where the value of the product increases for every party involved.

Growers United / Prominent continuously focuses on clear communication and innovation. Curious to know how we can assist you? Do not hesitate to get in touch with Wim van den Berg of Growers United / Prominent: w.vandenberg@growersunited.nl of +31 (0)6 5756 4346.

Prominent is a brand of Growers United UA. This organisation is responsible for the sales, marketing, and quality control of the product.

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