Retailers Lead Manufacturers on Key Growth Priorities: Study

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Retailers Lead Manufacturers on Key Growth Priorities: Study

COLORADO SPRINGS, Colo. -- Retailers are outpacing consumer packaged goods companies when it comes to embracing the key issues driving new and sustainable topline growth, according to a new study conducted by Meridian Consulting Group for the Global Market Development Center.

The study, "Jump Starting Top-line Growth II," is a follow-up to a 2005 report by the GMDC and Meridian that examined the overall framework for growth and what was required to achieve success. The new report builds on the framework of the first study to more closely examine the barriers to growth and techniques to overcome them.

"Growth is important to retailers and manufacturers, but retailers are often looking at broader business issues and tactics above single categories, while many manufacturers are still operating at category or even brand levels with a narrower set of solutions," said Ted Taft, managing director of Meridian. "This involves not only business solutions at store level, but stronger retailer emphasis on business processes such as reinvention and even implications for organization structure."

According to Keith Wypyszynski, chief member officer of GMDC, the study reviews business model challenges and go-to-market requirements to uncover action steps that are needed to improve top-line results.

"Retailers placed top priority on developing new usage occasions and categories, as well as new services to enhance the shopping experience and create greater differentiation," said Wypyszynski. "Manufacturers are also focused on new channels, as well as new products as key growth drivers."

In the four critical areas of strategy, process, structure, and execution, however, retailers surveyed registered greater support for pursuing key growth drivers than did CPG companies, noted Michael P. Shinall, c.e.o. of Meridian. "Historically, manufacturers have been perceived as being ahead of retailers in terms of identifying new approaches and opportunities to drive growth," he said. "This study suggests that the reverse is now true -- that it's retailers who tend to be more aggressive about tackling the issues that are most likely to result in business growth."

Beginning with "strategy," the study identified three key growth priorities: Expansion to additional product categories (for retailers) and additional retail channels (for manufacturers); development of higher-level solutions above categories/category management, such as at the aisle, department, or store level; and addressing business needs with a broader set of tactics than the '4 P's' of product, price, placement, and promotion.

When asked to rate the importance of these three areas on a five-point scale, retailers led manufacturers in terms of "developing higher level solutions" (3.9 / 3.0) and "addressing business needs beyond the 4P's" (3.6 / 3.0).

The two parties were essentially even with regard to "expanding into new categorie," with retailers rating the statement 3.6 and manufacturers 3.7.

In terms of "process," the study identified "reinvention" as a critical part of an organization's planning process, along with the "integration" of cross-functional inputs to ensure strong go-to-market plans and execution. The study found retailers placing stronger importance on both "reinvention" (3.6) and "integration" (4.2) relative to manufacturers (3.4 and 3.8 respectively).

"Reinvention has become a major focus of senior retail decision-makers as competition grows across, not just within, channels," said Shinall.

The study identified two key priorities related to "structure": A structure/resource plan capable of supporting growth areas where an organization wishes to excel; and development of 'business managers' with broad business understanding rather than simply 'silo expertise' in a limited area. Although retailers and manufacturers were even on the "business managers" issue (3.8 / 3.8), retailers led when it came to "support" (2.9 / 2.5).

"Execution" was the final element of a successful go-to-market plan, and both retailers and manufacturers agreed on two key priorities: Marketing through the retailer; and ensuring that new growth programs brought to market become part of 'how business is done' at all levels of the organization. Once again, retailers were ahead of manufacturers in terms of "how business is done" (4.0 / 3.6). However, manufacturers outpaced retailers on the issue of "marketing brands through the retailer" (4.1 / 3.6).

"Jump Starting Top-line Growth II" included an initial survey of 190 organizations across consumer packaged-goods and related industries. The study further combined quantitative surveys with retailers/wholesalers and manufacturers, as well as interviews and development of brief case studies to illustrate key points.

GMDC is a global trade association serving general merchandise and health and beauty wellness retailers, wholesalers, and suppliers.