Retailers are engaged in a constant battle with their competitors
because supply has outstripped demand over the past several years.
At first glance, however, these retailers do not seem very
different in terms of offerings; differentiation occurs mainly in
relation to prices and execution, from procurement to final sales
The large retailers have implemented several strategies:
They have expanded their range of revenue sources and their
offerings, for example through referral fees, program fees,
promotions, billing fees and product withdrawal fees. Suppliers
often bear the burden of these fees.
They have implemented effective supply chain management
systems, operational systems and price control systems, which are
critical factors for success in a sector where profit margins are
thin and salaries are a major consideration, especially in
They have made maximum use of information technologies such as
POS and EDI1, which enable, for example, category
management. In order to improve their management of the multitude
of products they offer, retailers have grouped them into different
categories. Each category is managed as though it were a small
business. This method facilitates product selection, price setting
and planogram design. With the information provided by this system
and different loyalty programs, retailers benefit from a wealth of
marketing information that allows them to effectively segment their
customers and devise strategies to increase their customer traffic
as well as their profits. This sector, where an understanding of
consumer behaviour is a condition for survival, benefits from
sophisticated information gathering tools and very precise
Store hours of operation have been extended and the number of
products has increased, varying from 15,000 to 60,000 depending on
the surface area.
Retailers regularly invest in updates to their image and store
configurations. Shelf space is valuable and must be maximized; as
required, retailers do not hesitate to remove from the shelves
those products that don't meet their profitability criteria or
don't appeal to customers.
Additionally, head offices work hard to develop their private
brands, thereby generating higher profits and more customer
There has been an increased focus on continuing education for
staff to improve customer service and ensure adherence to health
and safety standards.
In order to please consumers, many of whom are not always
loyal, retailers strive to offer an unrivalled experience as they
look out for new trends. They are thus involved in all emerging
trends such as prepared meals, sustainable development, sustainable
fishing, buying local, health food, ethnic products, fresh fruits
and vegetables and organic products. They manage an array of rebate
offers, loyalty cards and tools to facilitate shopping. To attract
customers, they offer certain products at prices that negatively
affect their profit margins, which impacts the brands that
manufacturers develop at great expense.
Yet the cost of these initiatives and business strategies are not
passed on to the consumers who benefit from it; pressure is rather
exerted on the suppliers who, in order to sell significant
quantities of their products, are left with little choice but to
compromise on pricing with retailers.
How can they come out ahead in this environment where they
ultimately do not wield much bargaining power?
My next blog will focus on the supplier's point of view.
1 POS scanners in sales outlets, EDI, electronic
data interchange software
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Effective September 1, 2016, the Disposition of Surplus Real Property Regulation to the Ontario Education Act was amended with the intention to reduce barriers to the formation of health and community hubs in Ontario.
Health Canada is proposing to change the way that it regulates non-prescription drugs, natural health products and cosmetics in Canada, which will now be referred to collectively as "self-care products."
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).