Retail media is exploding in front of our eyes. In 2023, retail ad spend reached an estimated $45.15bn in the US alone. In 2024, it’s expected to grow by 22.5%.
What’s more, with Google having already begun the process of switching off third-party cookies, retailers have started harnessing their first-party data, and the balance of business power has shifted in their favour.
So how does this impact brands looking to work with retailers?
Traditionally, a brand working with a retailer would put forward a business plan, for instance: “We’ll provide stock every six months, run four promotional campaigns throughout the year, and review the partnership terms at the end of the year.” The retailer would likely agree, and the relationship would start from there.
However, since retailers are now in a stronger position thanks to their growing volume of first-party data, brands need to think about strategic joint business planning that allows both parties to benefit in the midst of an increasingly competitive retail landscape.
How well do you know your retailers?
To gather these insights, brand leaders (and their teams) need to be able to answer specific questions about the current position, needs and preferences of any retailer they want to work with.
Joint business planning is about seeking opportunities for collaboration between brands and retailers, enabling them to build deeper relationships that are beneficial for both parties. For brands to find these opportunities, they need to understand what retailers are trying to achieve.
A good place to start is by identifying any common objectives with the retailer, based on the initial information the retailer shares.
Another way brands can understand more about prospective retailers is to conduct a positioning analysis from the retailer’s perspective. What are the retailer’s strengths, challenges, and short and long-term goals? How data-mature are they? Are they testing new routes to market, or new delivery methods? From there, brands can start digging deeper into the specifics of their marketing and operations strategy.
Knowing which questions to ask and being able to answer them is a crucial part of the planning stage. Armed with this internal insight, brands stand a much better chance of forming a proposal that hits the mark with each retailer.
Prioritising retailers for better business planning
In order to determine where to focus the most time and resources in the business planning process, brands should start by prioritising their retailer relationships according to three tiers: foundational, advanced, and leadership.
Foundational level
The foundational tier represents basic joint business planning opportunities, e.g. the brand and the retailer may share some common objectives, and the strengths and challenges of the retailers present some – albeit limited – opportunity for collaboration.
Brands may decide they lack the resources or the inclination (based on the insights they have gathered) to develop a deeper relationship with these retailers, beyond, say, having stock listings at the present time. However, they may be open to further collaboration in the future.
Advanced level
Within this second tier, brands will have identified retailers they feel they better understand, and/or those they feel could offer greater collaboration opportunities. Placing a retailer in this tier means brands can build on what they already know, and invest some resources developing further analyses into aspects such as supply chain and logistics efficiencies, as well as the shopper marketing process.
Inevitably, brands are likely to spend more time and effort on retailers in this tier compared to foundation-level retailers.
Leadership level
The leadership level tier represents the greatest priority for joint business planning. Placing a retailer in this category requires the highest level of commitment and investment in research and developing a collaborative relationship with key decision-makers.
In this tier, brands are focused on creating a two-way partnership when it comes to consumer data, where they are prepared to share basket information, consumer demographic understanding, shopper research, and potential growth strategies with the retailer.
In this type of close relationship, retailers would also be expected to share upcoming innovations, growth numbers for the brand’s respective category, and strategies for acquiring new households, increasing basket size etc.
Get to know retailers better in 2024 and beyond
As retail media continues to gain momentum, it’s imperative for brands to gain a nuanced understanding of their relationships with retailers and examine opportunities for greater collaboration using joint business planning.
To do this, brands need to question and build upon their working knowledge of retailer objectives, strengths, challenges, and more – before identifying which retailers present the best investment opportunities.
Ultimately, joint business planning is about fostering deeper relationships and leveraging data collaboratively to better serve customers and create mutual value.
At Cognitive Union, we use our 25 years of combined experience to provide our clients with consultancy and training in digital, marketing, data and culture transformation. If you need help understanding your brand’s relationship with retailers, contact our team today.