Retailers Say They're Ready for Change to Trade Spending: Cannondale Study

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Retailers Say They're Ready for Change to Trade Spending: Cannondale Study

WILTON, Conn. -- When it comes trade-spending practices, it seems vendors are from Venus and retailers are from Mars, and that leaves consumers nowhere, according to new research from Cannondale Associates, Inc. here.

Trade spending is back near all-time highs, after dropping in 2005 -- yet manufacturers continue to view the practice primarily as a tactical tool to drive short-term brand volume, and that frustrates retailers, according to a new study produced by Cannondale.

It also turns out manufacturers are frustrated with what they see as retailers’ trade-spending attitudes, leading to a stalemate that is hurting everybody, according to Cannondale’s report, entitled "Shopper-Centric Trade." It is Cannondale’s twelfth industry report on trade promotion spending and merchandising.

The study of industry practices identifies obstacles to success in trade promotion, and calls for change in a domain that offers huge potential to manufacturers and retailers alike.

In the study’s survey, 92 percent of retailers said they’re ready to consider new approaches to their trade promotion strategies.

But the majority of manufacturers claimed that their customers do not want new and different insights and plans brought to the table. This dichotomy, coupled with manufacturers’ fear of volume loss and perceived lack of analytical resources, leaves the game of trade promotion at a stalemate; the same methodologies are used with no winners and few tactics for change, Cannondale said.

It is clear that with regard to trade promotion, miscommunications between trading partners are detrimental to the business of both sides, Cannondale said.

Despite this impasse, however, it is common across the CPG segment to believe that major trade promotion transformations are on the horizon. By closely collaborating with retailers and viewing trade as a long-term strategic marketing tool, suppliers who are procactive could soon reap the benefits of leadership, Cannondale advised.

“The key will be an increased focus on the consumer,” said Todd Bortel, senior consultant, Cannondale Associates. “Retail customers currently account for 60 percent of total marketing spending, and the individual shopper is too rarely a pillar of trade promotion planning.”

Surveyed retailers identified the manufacturers that they said currently perform best in trade promotion, including Procter & Gamble, Kraft, and PepsiCo.

For their part, manufacturers lauded the same key retail partners that have occupied top 10 positions in past studies. Wal-Mart was named best across all three trade metrics -- strategic vision, execution, and trade promotion overall -- while Publix, Kroger, and Target were also ranked highly.

“Shopper-Centric Trade” is based on over 450 responses from a broad variety of retailers and manufacturers that ranked each other on strategic and business trade fundamentals. This includes food, HBC, and general merchandise manufacturers as well as grocery, drug, and mass retailers. It was based on a combination of quantitative analysis and qualitative survey and interview feedback.