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Many branded retailers are stuck in low growth mode, under challenge from discounters, using traditional promotions and volume based rebates to prop up under pressure margins.
What’s missing is a Framework for Growth. One based on scientific foundations.
I have been thinking a lot about this recently but my whole career has, one way or another, been at the interface between retailer and supplier and so I've had a long time to consider what's needed.
The epiphany for me came when I reconnected with “How Brands Grow” and attended the HBG for Executives course in Marseille last year.
Suppliers and retailers both want growth, are mutually dependent, but they go about it ineffectively, without focusing on, or measuring what really matters.
Retail Media , and the associated focus on customers, can be a catalyst for transformational change.
But in many retailers it is not central to how commercial teams try to trade their way to growth. In many cases, responsibility for the RM P&L sits within marketing or some other silo away from the main action that exists at the interface between retailer and supplier.
And so the massive potential of retail media is not embraced by Commercial teams as they are not on point for the delivery and they don't really understand how brands grow beyond range, price & promo.
In markets where branded retailers have high market share they get to call the shots. So change needs to be retailer led.
The retailer's Commercial teams require training and need some new KPIs but this is not sufficient unless suppliers also change and so this needs CEOI/C-suite intervention.
Here’s the supplier memo that kicks off a transformation :
From: Retailer CEO / Commercial Director
To: All Supplier Partners
Ssubject: Driving brand and category growth – our new growth model
Dear Branded Supplier,
Our joint objective has always been the same: grow categories and grow brands. But the traditional tools we have relied on - promotions, volume-based rebates, deal funding, are no longer sufficient to build long-term customer growth. They create short bursts of activity without increasing the overall number of people who shop with us and buy your products or our categories.
Marketing science is unequivocal: Long-term brand growth comes from increasing penetration - gaining more buyers. That only happens when brands maximise:
To support you in achieving genuine penetration growth, increasing the number of customers who buy our categories and your products, we are evolving our joint business planning.
1. Retail media as a core investment, not an optional extra
To ensure your brand is visible to more shoppers, more often, we are introducing a clear expectation for all suppliers:
Suppliers will commit a defined % of their annual sales with us as retail media investment.
This percentage will vary by category, but the principle will be consistent: visibility-led investment must be planned, predictable and central to the annual business plan.
This shift mirrors the approach used by the most growth-oriented retailers globally and ensures media investment is:
This is not a tax. It is a shift towards the interventions that actually grow brands and categories.
2. A reduction in volume-based rebates
To help balance this evolution, and to simplify the economic model for both sides, we will be reducing our reliance on volume-based rebates and deal linked payments.
These mechanisms create volatility, accounting risk and complexity without improving long-term penetration.
A portion of these rebates will transition into structured, visibility-led retail media commitments.
We want less dependency on discount-driven volume and more focus on “availability” driven penetration growth.
3. Your responsibility is to actively grow the number of category and brand buyers
This is a critical point and a foundation of the new model:
It is the supplier’s responsibility to measure and grow the number of people who buy their products.
Not just to supply product. Not just to run promotions. But to measure and grow penetration, the engine of long-term brand growth.
Our Retail Media Network exists to help you achieve this by:
Retail Media is not a peripheral activity. It is the most effective means we have to help your brand grow buyers.
We need your commercial and marketing teams to actively measure and grow the number of customers who buy the category and your products
We are also making available a range of tools that help you to understand our customers : who is buying our categories and your brands and to learn what activities are driving growth.
We expect that all buyer/commercial meetings will start with a review of customer penetration will discuss what can be done to grow it.
4. A new JBP : Category & Retail Media led growth
Going forward, each supplier will have a Joint Growth Plan which defines:
This ensures that all investment focuses on growth. It delivers predictability and a greater return on investment
6. What happens next
Over the coming planning cycle, our teams will work with you to:
Closing Message
This new model reflects what the evidence clearly shows drives growth, not necessarily how we have historically traded.
Your responsibility is to grow the number of category and brand buyers. Our responsibility is to provide the scale, visibility and retail media ecosystem to help you do it.
We look forward to building this next phase of growth together.
CEO
