Advantage Survey: what do retailers really think of suppliers?

Every year, Advantage Group asks retailers to score their suppliers. This survey is not just about whether shelves are full or ranges are right, but whether their relationship is truly a partnership. Are suppliers bringing insight, thinking digitally, driving their category forward and understanding the different channels?

The results are drawn from almost 2,100 individuals across 11 of the UK’s biggest retailers. They are not usually made public – but this year for the first time The Grocer can reveal them. The picture will make for some uncomfortable reading.

Overall supplier performance had a score of 33, compared with 34 last year and 28 the year before that. Participants are asked to rank each aspect of the relationship on a scale from -100 to 100 across 38 competencies grouped into six main areas: organisation & people, category & consumer marketing, trade & shopper marketing, supply chain & customer service, private label, and ecommerce.

One way to look at that overall score is through the prism of stability. In a year of enormous cost pressure, geopolitical and supply chain upheaval, strategic realignment and rapid digital change stability is not a bad thing. But there are clear areas where retailers are marking suppliers down and, therefore, clear ways for canny suppliers to gain a strategic advantage over their competitors.

Andrew Johnston, MD of Advantage Group UK and Ireland, says: “On the surface, the scores suggest it’s a year of consolidation, but overall it’s a bit mixed in terms of supply. When you get underneath the data, there’s opportunity by competency and by business area. And when we look at the interviews, we can see the sentiment is actually quite mixed to negative, so there’s still some opportunity in the marketplace.”

The data also suggests operational fundamentals are good – supply chain scores are strong, communication is improving and on-shelf availability is good. But there are clear areas where suppliers are losing ground. Commercial activation has been rated as weak, trade investment scores are falling and retail media was described by one retailer as a “trade afterthought” by most suppliers.

Perhaps the most obvious area for improvement is ecommerce. Ecommerce vision had the single lowest-scoring competency in the entire survey. Retailers suggest suppliers “are not online experts” and that they are taking what works in bricks and mortar and copying it online. The gap between those suppliers that understand this and those that don’t is, according to the data, wider than anywhere else.

So, what really matters to retailers? Where are suppliers scoring better and worse – and why? And what can suppliers do about it?

Where suppliers are falling short

The most striking aspect of the survey is the low score for ecommerce. Across a range of metrics from digital leadership to ecommerce integration and online content, most of the scores are below 20 and overall it scores 19. Ecommerce vision has a score of just 10, while ecommerce integration is on 14 and drives online growth 16. Digital leadership had the biggest improvement in the entire survey, but it went from eight last year to 20 in this survey.

Retailers are unsparing in their assessment. “They take what they have done in bricks and mortar and simply move it online,” said one. “There is significantly more they could do but we do not feel we are interacting in a way that challenges either side.”

That, says Futter, is because ecommerce is “a really hard thing for a supplier to do”. Very few smaller suppliers will have dedicated digital resource because with bricks and mortar still making up the bulk of sales in fmcg “you have to put your efforts where you’re going to get the biggest returns”.

“The only suppliers that will be really good at it are your big, branded suppliers, people like Unilever, P&G and Coca-Cola,” he says. “The other suppliers, they’re massively stretched.

“They will be looking at ecommerce and thinking, ‘well, what am I going to get from it’, whereas they can see the return from bricks and mortar. I wouldn’t even say with retailers that it’s high on their list.”

Karen Green, business coach at Buyerology, agrees. She works with businesses with turnover of up to £50m and says very few of them have a dedicated ecommerce specialist. The Advantage survey suggests, however, that retailers are putting more strategic focus here and that those suppliers who can invest time and resources will reap the rewards in everything from improving digital content such as descriptions and images, to thinking about what the future of online looks like.

“There is a gap between expectations and delivery from suppliers,” says Johnston. “It’s one of the areas where we see the bigger distinction between the top performers and the lower performers.”

Trade & shopper marketing was the lowest-scoring business area, with just 17 overall. Within that, trade investment scored just 12, retail media service 13 and margin 14. Retailers are clear about what best practice looks like and that most suppliers aren’t reaching it. “The best partners treat retail media as an integrated part of their total media strategy – not a trade afterthought,” said one. “They bring cross-functional teams to the table: brand, marketing, agency and commercial.”

For Futter, it’s a case of where suppliers choose to invest. “There is not an infinite amount of money,” he says. “And if profits are under pressure because of inflation, that’s the first thing that goes.”

Category & consumer marketing, has an overall score of 29. Range/assortment comes in at 33, category growth at 32 and production innovation at 29. Retailers know what they want here: “The best partners come to us first with a pipeline of well-reasoned, consumer-led innovation that’s aligned to our strategy, not a generic catalogue,” said one. “Innovation isn’t a conversation they wait to be invited to – it’s part of how they show up every time.”

“Retailers want people that are going to grow their category in the way they want to grow it, whether it’s volume, value, penetration or weight of purchase. The best suppliers know what those metrics are and they’re talking objectively about them and about how they add incrementality to their category,” says Johnston. “It’s definitely an area where retailers are saying, ‘look, help me out here. We want to find growth, we want to achieve that ambition’ and the best suppliers are stepping in on that in the right way.”

Where suppliers are holding up

For retailers, organisation and people is the cornerstone of a good supplier relationship. When asked to rank their top 10 in order of priority, all but one of the competencies they picked were in this area, with communication, trust and strategic alignment at number one.

Suppliers will be relieved to hear, then, that this was one of the highest-scoring areas at 43 – flat on last year’s score and up from 36 the year before. Within this group, capability & experience scored the highest on 51, ahead of trust and delivers commitments, both on 45, communication on 44 and cross-functional alignment on 43.

Retailers are also clear about what they want from supplier teams. “The best bring the right people and right energy”, said one. “They’re capable, motivated and genuinely interested in the retailer’s strategy – not just their own brands.”

“The people part is not to be underestimated,” says Johnston. “It’s not just are the people capable and experienced, though that’s a huge part of it. The bit behind that is, are these people empowered? Are they set up for success by their organisation to be easy to do business with.”

Supply chain also performs strongly, with an overall score of 48. Within that, supply chain efficiency scored 51, supply chain communication 50 and on-time and in-full supply 49.

“This tells us suppliers are still prioritising supply chain and it is absolutely a fundamental to any success of an organisation with an external partner,” says Johnston. “What’s great is the score is good, there’s still a high level of satisfaction and it’s still strong despite some of the challenges that we’ve had during the start of this year.”

One area Ged Futter, director of Retail Mind, pulls out is forecast & demand planning, which scored 46 – the lowest in this section albeit still a strong score. “Forecasting comes up very regularly [in the GCA survey] as an issue, so what that means for suppliers is they’ve got to take control of forecasting themselves. There’s a heavy reliance on the suppliers to be in effect managing forecasting and managing the supply chain.”

Private label has the highest competency score at 51, with private label technical expertise hitting 55 – the highest in the survey. But as Johnston puts it, “the polish has come off” a little bit. Technical expertise dropped 12 percentage points year on year, production capacity was down five and commitment down three.

Here, says Johnston, it is down to resource allocation. “Our survey suggests companies aren’t necessarily providing the same level of resource and frequency of contact, certainly from a technical perspective, with their retailing counterparts.”

The vision gap

One further lens through which Advantage reads its data is today – partnership (32) and execution (34) – versus tomorrow – reputation (39) and vision (25). That gap shows retailers broadly trust suppliers to deliver operationally but have a less credible view of where the relationship is heading, and that’s a concern in a fast-moving market like grocery.

“The vast majority of [what suppliers get] from the retailers is about today,” says Futter. That is particularly the case at a number of retailers, such as Asda, Morrisons and The Co-op, where strategies are shifting rapidly or, in the case of Morrisons, for example, whole buying teams have been overhauled. “That means you really have to make sure you’re getting everything today right, and keeping that will keep the relationship.”

For Johnston, one key thing to point out is that while many of the category and competency winners are large suppliers – Unilever Homecare has the highest score in household and in retail media service, for example – there are a cohort of smaller suppliers such as Oatly, Biotiful and Moju “demonstrating great agility, great innovation capabilities, and great consumer and shopper centricity to bring some really good and bespoke executions to their retailers.”

It’s clear that to move the needle, suppliers need to make some changes. But where should they focus their attention?

For Green, the key thing is that suppliers look at which criteria are critical to their success and invest time and resource in those areas. And look at the priorities of the retailers. “The question is where are you going to put most of your effort? It’s going to be on making sure customer service and margins are right, you’ve got the right people to manage the relationship.

“I would also certainly want to be looking at the marketing side, because that’s so critical. But first and foremost, you take these scores and you say, ‘which of these criteria are critical to my business’s success’.”

The stakes, Johnston is clear, are commercial. “What we notice is that if a supplier is scoring in the top third, they tend to be outperforming their competitive set,” he says. “If they bring friction to their retailer, that friction could, and most likely would, lead to an impact in their overall performance.”

The solution, he argues, is not as complicated as suppliers might think, with the best relationships built on both operational reliability and strategic ability. “[Retailers want suppliers that can] come with an objective, category-driven plan that, over three years, will treat the trends you see coming down the line from a consumer and shopper perspective,” says Johnston. “That tells me this is a supplier that knows what they’re doing and I can trust them to work with me on my category.”

For most suppliers that is the challenge and the opportunity: to get the basics right while keeping an eye on where they need to go next. The survey makes it clear where retailers see friction, it’s up to suppliers how they act on it.