Apr 08 2015
Let’s get started with a simple exercise. Of the following retail brands, how many do you recognize?
Costco, Home Depot, Target, Lowe’s
So how did you do? My guess is that you’re probably familiar with all of these retail chains – and that’s for good reason. The retailers listed above are among some of the most innovative and profitable retailers in North America. And in order to drive their continued growth, these companies have adopted a new retail model which recognizes the importance of mutual success across all stakeholders. Whether it’s customers, vendors, employees or the communities they serve, a retailer’s success is very much dependent on its supporting cast. But aside from being leaders in the retail industry, what’s particularly unique about the retailers listed above?
A Step in the Right Direction: Retail Vendor Portals
Companies like Costco, The Home Depot, and the others listed above have endured lasting success because they have implemented systems and processes that have decentralized decision-making and provided more autonomy to vendors and store-level management. An important facet of this new mindset is recognizing vendors as partners in the retail relationship. By allowing vendors to contribute to retail strategy and execution, retailers seem to have cracked the code for retail collaboration success. Rather than micro-manage each and every vendor partner (and their many SKUs), top retailers are empowering their vendors with POS and inventory data using enterprise systems known as Retail Vendor Portals.
A Retail Vendor Portal (otherwise known as a Supplier Portal) is a web-based software solution which allows product vendors to plug into the retailer’s downstream data feed and receive store-level metrics such as: sales dollars, gross margin dollars, total transactions, inventory levels, and other loyalty related data. With the resulting insights, vendor partners now have the toolset at hand to collaborate with the retailer and optimize product assortments, maximize promotional ROI, and address inventory issues that are impacting sales.
From the point of view of the retailer, handing over the keys to their data is a no-brainer. Rather than spend hundreds of thousands of dollars (if not millions) on analysts, planners, and coordinators, forward-thinking retailers are now handing over autonomy – as well as higher expectations – to their vendor partners. After all, no one knows the product and the target customer better than the product manufacturer. This breakthrough in the retail planning process has allowed retailers to become leaner internally while allowing their vendors to do what they do best: move product and foster sales growth.
Shifting Focus: Do What You Do Well
Retailers have recognized that it’s virtually impossible to do everything on your own. Retailers that have gone down the “soup to nuts” path often suffer from slow internal processes and as a result often find themselves playing catch up with their competitors. By focusing on their strengths, top retailers are able to increasingly allocate resources to optimize logistics, improve the in-store experience, and execute chain-wide initiatives that make their brick and mortar retail experience second-to-none. By slowly changing the culture from vendor-management to vendor-empowerment, retailers are also afforded the flexibility to pilot new solutions that allow them to stay ahead of the competition.
The Devil’s in the Details
Regardless of whether you already have a data sharing solution or if you’re just exploring the option of implementing your own vendor portal, there are some important factors to consider as you venture down this path.
1) Vendor Buy-In: No matter how much you invest in a data sharing solution, it’s all for nothing if you can’t get your vendors to jump on board. This is why it’s simply not enough to provide a “solution” that hands over raw data to your vendors. It’s unreasonable to expect that your vendor teams are composed of data scientists, which is why it’s just not enough to create a cloud-based solution that resembles excel spreadsheets. Like the retailer, vendors are strapped for time and resources and this is why it’s important that your vendor portal solution is both user-friendly and insights-driven.
2) The Revenue Windfall Fallacy: It’s also easy to be scared away from implementing a data sharing solution because of the significant costs and resources associated with a traditional portal solution. To offset the high implementation costs, vendor portal solution providers are often quick to point to the potential revenue windfall when the data is sold to vendor partners. What they often fail to mention though is that the success of any supplier portal solution is highly dependent on adoption and that out-pricing vendors can severely limit the potential success of such an initiative.
3) Cost & Flexibility: Thankfully, the advent of cloud-based technology and open-source frameworks have allowed scalable, cost-effective retail intelligence solutions to emerge which provide increased value, functionality and vendor adoption versus more expensive data sharing solutions from old-line technology providers. Furthermore, modern analytics platforms typically offer native mobile applications, allowing users to access insights and retail data wherever they go. Whether walking the aisle or meeting with customers off-site, a mobile solution coupled with cloud access ensures your retail insights are available anywhere, any time. With a cost-effective and powerful retail analytics solution, you don’t have to worry about poor adoption at the expense of exorbitant vendor fees, enabling a solution that makes sense for both you and your vendors.
Finding The Right Solution For You
Navigating the vendor portal landscape can be difficult, especially if you don’t quite know what you’re looking for. Each solution can offer different benefits and tradeoffs, which is why it’s important to recognize your organization’s priorities and consider the various factors mentioned above. If data sharing through a retail intelligence platform is on your company’s radar, be sure to book a demo of Askuity to see our industry leading platform in action.