You’re next chum!
Loki, our Dalmatian should be concerned. One of his priorities in life – food, has moved front and centre of the conflict that surrounds price inflation. The spotlight for commercial conflict in retail has moved from a row between Kraft Heinz and Tesco to Mars and Tesco. Pet food seems to be the new ‘conflict playing field’ for the battle to push through price increases.
Of course, this conflict is being replicated with numerous retailer and supplier battles taking place up and down the country - we just don’t hear about all of them. As these conflicts progress, they will inevitability help to start to create precedent and shape the nature of the objectives set, the strategies employed, and the specifics within the deals agreed.
Precedent though, is only one factor of many that the parties will need to consider as they engage with each other trying to find a negotiated resolution which both sides can live with. We can see the powerplays being used in public already with retailers telling us that ‘masses of people are moving to cheaper own brands’ (signal, even if you get your prices through Heinz/Mars – people are likely to move away from your more expensive branded products). There are also the things we don’t see – delays, postponements; proposals being kicked upstairs into ‘the long grass’.
Of course, the big traditional retailers (there are others) need to be careful too – part of their proposition is about choice, and as long as people want brands – having an increasing number of holes on the shelves where an increasing number of brands used to live, is not a good look.
Ultimately though, it’s the public that will decide the winners and losers in this battle between the brands themselves, and between the retailers and the brands.
It’s all about our priorities, a lot of us will do this instinctively as part of our own internal negotiations (business should do the same as part of a formalised process). ‘If I have 10% less to spend than I did 12 months ago, where do I economise?’ – ‘What don’t I need at all', (what isn’t a priority), and for the rest: 'Where can I make do with different, where can I have less and where don’t I change at all?’ For example, non-branded cereal, less alcohol and/or chocolate or maybe volume purchases instead.
For the retailers and suppliers, the influence that their respective marketers can bring to bear on the ranking of the consumers’ priorities will be key. This of course will need to be closely aligned with a realistic price proposition which speaks to their targeted demographics. Those who can address these two issues should be successful.
As for Loki, he has very eclectic taste when it comes to food (apart from lettuce). He displays flexibility, agility and adaptability when it comes to food – one of his priorities. These are qualities I feel that we’re all going to have to display with our own priorities in the coming months.
No dogs were underfed in the production of this blog, and Loki tells us that any taster products will be gratefully received.
Sam Macbeth, 7th July 2022
If you'd like to receive occasional email updates with useful actionable insights into commercial conflict resolution and negotiation, sign up here.