Relationships between the Giants in Retailing: how WalMart and Procter&Gamble trade together - from Fear to Trust prevalence in the Supply-Chain

Résumé du document

The paper shows how the relationships between suppliers and retailers have experienced several important changes over the last decades. By analyzing the main developments of these relationships and the different tools implemented to improve them, the paper argues that the business to business approach to retailing is following the same trends worldwide. Based on two of the largest partners in the worldwide retailing environment, Wal-Mart and Procter & Gamble, the paper illustrates how the buyer's market has gradually resorted to a cooperation strategy between the supplier-retailer relationships. It emphasizes the features of Category Management. Over the last several years, the nature of the buyer-supplier relationship in retailing has been undergoing dramatic changes. Industry observers and researchers have described these emerging relationships as "partnerships" or "strategic alliances," as opposed to the traditional "arm's length" type of associations.

Extraits

[...] This close relationship between manufacturers and retailers has experienced three general stages since the early 1990s: trade marketing, Partnering and Category Management. Trade Marketing Randall offers the following definition of Trade Marketing: methodical procedure carried out jointly by suppliers and retailers, whose objective is to better serve customers' needs and expectations, increase profitability and competitive position, while taking into account each other's constraints and specificity.” (1994, p118). This emphasizes the partnership aspect of the manufacturer-retailer relationship, in order to get the most benefits for both parties. [...]

[...] And considering the two most significant retailing partners in the United States, Wal-Mart Stores' revenues are three times those of Procter & Gamble Company (Kumar p92). As a consequence, Wal-Mart is now established as the most powerful retailer in the US, receiving 8 per cent of US consumers spending through its tills. At the time the supplier's market ruled, Procter & Gamble used to limit the quantities of high-demand products they would deliver to a given supermarket chain, insisting that the supermarket carry all sizes of a certain product, and demanding that the supermarket participate in promotional programmes. [...]

[...] Kumar (1996, p95) justifies this by the fact that together, manufacturers and retailers can provide the greatest value to customers at the lowest cost possible There are also logistics considerations to take into account, such as the transaction-specific investments (TSIs) (Anderson and Narcus p48). Transaction cost minimisation can be said to lie at the heart of traditional retailing (Morelli p178). Seamless partnerships between manufacturers and supermarkets would accelerate the deployment of sophisticated systems such as just-in-time delivery, electronic data interchange (EDI). [...]

[...] pp. 35-56. Girard, L. (2005) La fusion de Procter & Gamble avec Gillette bouscule les groupes publicitaires Le Monde Kelly, H. H. (1983), "Love and Commitment." in Close Relationships, H. H. Kelley et al., New York: W. H. Freeman, pp 265-314. Knox, S.D. [...]

[...] Wal-Mart moved on from initial meetings to set up cross-functional teams, for specific categories, who interacted with their opposite numbers within P&G organisation. Initially, traditional buyer-account manager interaction could create a “bottleneck” in the flow of information and thus make less efficient the relationship. If a retailer were to enter this form of traditional relationship with a large number of suppliers, it would be highly time- consuming. (McGoldrick p296). Category Management is defined as strategic management of product groups through trade partnerships, which aims to maximise sales and profits by satisfying consumer needs” (McGoldrick p294). [...]