As retail is evolving, so are the relationships between marketers and the companies helping them to leverage the medium. Project based relationships are giving way to strategic relationships that are broader in scope, longer term in nature and evaluated on the basis of defined and measurable performance goals.

These strategic relationships are helping marketers to respond to the pressure to more effectively create, manage and continuously improve their retail programs. To understand why, it is important to understand the factors that are necessitating the change to the client/supplier relationship; (1) the growth and importance of the retail medium, and (2), incessant bottom line pressure.

THE GROWTH AND IMPORTANCE OF THE RETAIL MEDIUM

Never before has the importance of the in-store environment been so elevated in the minds of brand marketers and retailers. The proliferation of communications channels has diluted the ability of traditional media to hit the target, bringing increasing attention on the retail store as the surest point of contact.

Growing recognition by retailers that they themselves are a brand has raised awareness of the need to manage and distinguish their environments and the experience of shopping within their stores.

Brand companies are looking to the in-store environment as a more important and integral component in their marketing mix. Brand equity is becoming the last vestige of competitive advantage and brand marketers are recognizing the retail store as a point of tangible contact between their brand and their target consumer. There is increasing emphasis on the creation of in-store programs that deliver a more fulfilling brand experience.

BOTTOM LINE PRESSURE

Few industries are free from the pressure to reduce costs and retail is no exception. Retail is a physical business and the scope and complexity of programs is growing. In turning over every stone to find cost saving opportunities, strategic purchasers have recognized that the end-to-end process for retail programs needs to be optimized – from design and development activities, to production costs, to the wide range of logistical issues related to implementing three dimensional marketing programs to a multitude of store doors. It’s understood that there are efficiencies to be gained across the total supply chain, and that manufactured costs are only part of the equation. It is also understood that there are economies of scale to be realized between the programs that comprise a total retail presence, and over time as programs evolve.

BENEFITS OF NEW RELATIONSHIP MODELS

Traditional client/supplier relationships inhibit the ability to leverage the full potential of the retail medium. The use of multiple suppliers across multiple programs tends to undermine the coherency of a marketer’s total marketplace presence and impact, the effectiveness and efficiency of their processes, economies of scale, and ultimately the profitability of their retail effort. For this reason, marketers are moving toward strategic relationships with a single partner or a core group of agency/supplier partners, with an emphasis on tighter collaboration among the partners and defined end-to-end processes.

Performance benefits, including increased sales and decreased costs, are being realized.

Innovation is enabled, as a focused team armed with strategic information can create a stream of innovations that are more relevant and targeted than speculative efforts. Consistency of presentation, across channels and across geographic borders, is managed as is the synchronization of a marketer’s retail effort. A well-orchestrated retail plan assures that all programs are working in concert to maximize marketplace potential. These benefits, along with improved confidentiality of brand and retail strategies, ultimately impact sales and consumer loyalty. They are difficult to achieve without vested partners.

A long term strategic supplier is in a better position to identify cost saving opportunities than a one-program supplier. A partner with a view of the total supply chain can respond to the expectation to optimize efficiencies and to continuously improve processes, where a supplier given only a limited view of specific activities can not. Within the context of a defined partnership, speed to market is accelerated as the learning curve is diminished and the impact of awkward hand-offs is eliminated. Finally, a marketer’s internal capacity is improved, as a streamlined process allows them to focus on their core business while their partners focus on the creation and management of their retail presence.

Retail is changing for the better. One shot deals no longer make economic sense, and activities can no longer be viewed in isolation. Building a retail presence requires planning and collaboration, and managing profitability requires a long term view. As the relationships between marketers and their agencies improve, so will the potential of retail as a high performance marketing tool.