Why data collaboration between retailers and CPGs leads to better assortment decisions

It’s well-understood that retailers and consumer packaged goods (CPG) suppliers are better off working in collaboration. From pricing and promotions through to retail media, supply chain, and more, the closer the two are, the better results they tend to generate ¹. That’s true not just for each other, but for customers, too.

Assortment is another area in which collaboration can act as a force multiplier. When retailers and brands come together on assortment data, they typically gain a more nuanced understanding of categories and customers than they ever could alone. That, in turn, leads to better and more sustainable decisions.

Let’s look at five ways in which collaboration between the two leads to better results for everyone.

1. It makes it easier for suppliers to manage product evolution
   When retailers and brands work together, they get a shared understanding of what “success” looks like in a category. That’s useful, but it’s not the end of the story.

   When that alignment exists, it then becomes much easier for suppliers to manage the evolution of their product suite over time. With a deeper understanding of customers—why they’re making the choices they are, which products resonate with them and why, and so on—comes the ability to make smarter, more shopper-centric decisions.

   Collaboration gives suppliers the intelligence they need to shape their long-term product agenda—and shape it around the customer, too.

2. It creates joint buy-in—and a uniform perspective
   Having a shared understanding of a product’s role in a category—and the value it delivers—can help to create a joint sense of buy-in. Even if they don’t necessarily agree, suppliers can at least get an understanding of how a retailer thinks the category should develop going forwards.
   That, in turn, gives them a level of agency when it comes to decision making.
3. It empowers quickfire course corrections
   We’ve touched on long-term product strategy above, but a collaborative approach to data can help with near-term product decisions too. A shared understanding of product performance gives retailers and brands the ability to make course corrections across the year. That applies not just to overall performance, but the value that the retailer wants to add to a category, too.
4. It makes decision making more efficient
   When retailers and brands bring different data to the table, a lot of time gets wasted debating where it came from and how relevant it is. A shared data source, on the other hand, provides a unified vision of what’s happening in the category or with customers. That means that less time is spent trying to reconcile competing stories and different datasets.

   There are benefits at the other end of the process, too. There’s a legitimate cost to feeding and caring for individual data sources. A collaborative approach ensures that neither party wastes time gathering data that ultimately contrasts with information that the other holds.

5. It gives everyone a seat at the table
   In some geographies (including North America), retailers rely heavily on suppliers for category insights. These “category captains” provide recommendations based on a combination of their own data and any trends they are seeing in the market.

   One of the key challenges with this model is that it tends to be a very select group of organisations that get asked to fulfil that role. Occasionally, a small and particularly innovative supplier might be given the opportunity. More often than not, however, that responsibility tends to sit with large multinationals. Consequently, there’s always a risk that the voice of smaller brands goes unheard.

   When retailers and suppliers collaborate on assortment data—specifically, when they operate using a single, shared source of insights—it ends up being a much more democratic process. Not only is there no debate over how that information was created, and whether Supplier A or Supplier B’s data is more reliable, it ensures that everyone can have a seat at the table.

Of course, we can’t talk about the benefits of data collaboration without acknowledging that there are some challenges too. Typically, most of the issues that retailers and brands run into fall into one of three buckets.

1. Information is power—and power leads to control
   If you work in the retail data space for long enough, you’ll probably end up hearing a tale or two about insights being used in an adversarial way.

   Typically, it’ll start with a merchant telling one of their suppliers they’re not doing enough to help the category and that they need to drop their prices. Thing is, they both have access to the same data—so when the supplier comes back and says, “we’re growing at 4% and the category is only growing at 2%,” the balance of power completely changes.

   Apocryphal or not, that kind of story is testament to the fact that information is power. Because of that, some merchants (even those within progressive retail organisations) worry that sharing information actually puts them on the back foot. If a supplier knows as much as you do, after all, it’s going to be difficult to “nudge” them to take action—or so the thinking goes.

   The reality, as explained above, is very different. A harmonised approach to data is good for everyone. Sometimes, though, a fear-based mindset persists.

2. Data maturity varies dramatically between organisations
   Attitude isn’t the only barrier when it comes to collaboration. Some retailers (and suppliers) simply can't ingest and understand data at the kind of volumes that make it truly valuable. That prevents them from using it to drive strategic decisions.

   Unfortunately, this problem can also be self-perpetuating. Smaller retailers and brands are the ones that tend to struggle the most here, and that inability to use data to its fullest extent makes growth more difficult, too. Investing in their data capabilities can help them break that cycle.

3. Retailers and brands don’t always have the right tools
   Even when they’re willing and able to work collaboratively, retailers and brands can be held back from sharing effectively by the tools they use.

   Sometimes, that’s a purely technological problem. Even today, it’s not uncommon to find insights being stored in basic spreadsheets. These are typically very difficult to share—and decidedly “light touch” when it comes to actual intelligence, too.

   Other times, focus is the issue. Even some professional assortment management systems look solely at metrics like sales and profits when prioritising products. That’s not to say that data isn’t useful, but it can’t tell you whether your decisions are meeting the core needs that customers have in a category either. Vital—albeit niche—products can get left out as a result.

With the industry as a whole beginning to shift towards localised (and even hyper-localised) assortments, the need for retailers and brands to work together will only increase. New levels of specificity will create new levels of complexity, too—and so understanding customer preference at local level will help brands to ensure that they’re delivering product where customers want it most.

dunnhumby Assortment provides retailers and brands with a collaborative, user-friendly environment in which to share insights and create customer-centric ranging strategies. Find out how Assortment’s AI-powered capabilities can help you streamline processes, improve efficiency, and succeed at scale. Download the brochure now.

1 Retailer-Supplier Collaboration: Identifying and Eliminating Barriers to Improve Supply Chain Performance – Kane is Able