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Mergers can mean big business for supermarket giants, but often leave FMCG suppliers defenceless and vulnerable.
First it was Tesco-Booker, then it was Sainsbury’s-Asda. Now, the two retailers Carrefour & Tesco that are dominant forces around the world have announced their plans to join forces and enter into yet another strategic purchasing alliance. So, what can be done to get prepared and mitigate your risk in the impending ‘Tescfour’? We believe that by getting absolute clarity of your current pricing position you can take necessary steps to build a sound defence.
Create clear visibility of exposure
Operating across many markets brings complexity that can hinder the ability to see clearly. However, it is crucial in the face of these possible pricing alliances that you can quickly understand your position, in a digestible fashion. Wouldn’t you rather spend your time building your defence, than scrambling to gather data to understand your risk?
Our application, Acumen Radar provides just that. Our clients are always prepared for any pricing alliance which may arise, by completing their annual pricing ‘scans’ they have absolute clarity of any possible pricing risk across customers, channels and markets, readily available to them at the click of the button, whenever they may need it.
Quantify the risks
The next step involves taking this clear picture and drawing relevant conclusions from it. Build your defence. It is fundamental to know where you need to take action in order to avoid significant losses and suffer from the squeeze. Or alternatively, you may see that you already have a very defensible pricing structure in place & can rest-assured you know the facts and can defend your position & fight off any advances by your customer.
Scenario analysis
We would also recommend running through some potential scenarios, so you can be prepared to go into negotiations and have some options at hand. Acumen Radar lets you scenario plan various options, modelling the impact of price, discount and tax changes on your sales and profits, and the customers. Breaking down trade terms in a consistent format allows you to understand the impact of investment across customers and markets. The ability to forecast ahead empowers you to confidently plan a pricing strategy.
Bring it all together
By going through this process, you can build an action plan to put yourself in a more defensible position, and you'll have the facts to confidently defend your current position when retailers approach you.
As mentioned, at Acumen, we have been helping our clients to do this for 12 years now using our application, Acumen Radar. Alternatively, if you aren’t sure about implementing a tool, we also carry out one off consulting projects with clients when these market changes arise.
Stay prepared
Hopefully the steps here help guide you and provide some ideas as to how you can prepare. To learn more and see how we can help, contact us at info@acumenci.com to start your revenue management journey.