Cooperation and Competition in Retailer-Supplier Relationships

Abstract

They are the best of friends. They are the worst of enemies. That is the paradox of the retailer-supplier relationship: that on the one hand only by a true, close, strategic partnership can both sides succeed, yet on the other hand there is a constant struggle to get the upper hand.

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The Paradox of the Retailer-Supplier Relationship

They are the best of friends. They are the worst of enemies. That is the paradox of the retailer-supplier relationship: that on the one hand only by a true, close, strategic partnership can both sides succeed, yet on the other hand there is a constant struggle to get the upper hand. The war of private label vs. national brands has made retailers and their suppliers the fiercest of competitors. Endless battles over things like deduction disputes, the terms of the relationship (e.g. annual cost reduction targets), and miscommunications often strains these relationships.

However, we are entering an era where the performance of the end-to-end supply chain, with its myriad of players, matters more and more. Cooperation between trading partners to improve end-to-end performance is essential to the success of all participants. In spite of this, taking trading partners into confidence can be challenging and dangerous when the supplier or retailer is also your competitor. Even with a nondisclosure agreement in place, the sharing of product strategies, roadmaps, promotional plans, and other confidential data is uncomfortable, though it is done every day. In this paper we examine four important areas of cooperation and competition in the retailer and supplier relationship for 2004-2005, based on a survey of over 100 retailers and suppliers:

  • Vendor Compliance
  • RFID
  • International Trade
  • Private Label vs. National Brands

The retailers and suppliers who can master the paradox of achieving simultaneous self-interest and mutual interest in their relationships will be the winners.


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