Retail disputes can increase opportunity

Did anyone see the international headlines a fortnight ago? “Costco Stops Selling Coca-Cola”? One of the world’s largest retailers and one of the world’s largest consumer brands have severed ties over a price dispute.

Costco claims Coca-Cola failed to provide competitive pricing, therefore preventing the retailer from passing on value to its members. Coca-Cola’s comment was simply that it looked forward to the dispute being resolved fairly.

The Costco/Coca-Cola dispute is by no means unique; it’s just more riveting because it’s happening at the highest echelons of product retailing. We see it all the time locally and internationally when manufacturers and brands can’t agree on trading terms and therefore create a stand-off that ultimately impacts the shopper.

Through this presumably short-term dispute, both companies are effectively agreeing to lose money. They won’t lose enough cash to really hurt either of them, but just enough to hurt the shopper or influence purchasing change. And that’s where our retailer marketing ears should prick up.

Speaking from the perspective of my retail marketing agency, which sits right between manufacturer and retailer to deliver sales benefits to both sides, it is remarkable that such important companies are not already collaborative enough to see each other’s business constraints and agree on alternatives that benefit both.

They’ve let their own agenda – and theirs alone – render them narrow sighted enough to cause business disruption and inconvenience to their valued shoppers.

It provides for us humble retail professionals, some wonderful insight into the value of better relationships and how this is the only way to improve the delivery of better services, and better products into shoppers’ trolleys.

This is a power play of the highest order, and one that could very simply have been avoided. Sales volume has been used as a weapon in a brand fight, but neither side can possibly win while all the time the shopper suffers.

In the future of retail, the primary concern for all will be the shopper, as they spend in your store, on your product. Thinking of the shopper’s needs when making business decisions will change the way retailers and brands do business together. It is a positive step in the evolution of retail.

My global CEO, John Thompson, who is visiting Australia and New Zealand this week, had some interesting thoughts on the subject, which he shared with our business this week. He said:

“Coca-Cola and Costco have a great opportunity – a real chance to improve. It is obvious that the current working relationship is so strained that it has suffered a complete breakdown. However, as time passes and both companies eventually let the emotion drain, facts will surface which will allow for the leadership of both companies to resolve issues, strengthen their bonds and grow sales even further.”

The one consideration that I would add is Costco’s distinct advantage in the short-term. Its ability to influence shopper behaviour right there at the point of purchase, where the majority of buying decisions are actually made, is a powerful card that it could play.

Shoppers are adaptable, that we know. They won’t stop entering Costco just because they can’t find Coca-Cola on the shelves anymore, but while they’re doing their bulk shopping in store, they can be persuaded quite effectively to buy a different brand, simply through powerful in-store marketing tools.

Mind you, this dispute, like many headliners in international retail, is likely to be resolved before any real impact is made on shopper behaviour. And as a result, we should also expect the working relationships to evolve and improve.

Retail marketers that we are, we recognise that the biggest opportunities for improvement often reside in the worst sales situations. This story is an example of this rule in the working.
If we are committed to working together to gain insight and develop new strategies, we can overcome these challenges.

Keeping the shopper in our sites is key to making this happen. And, if we do it right, less of these splashy headlines will become talking points across the world.

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In his role as CEO of CROSSMARK, Kevin Moore looks at the world of retailing from grocery to pharmacy, bottle shops to car dealers, corner store to department stores. In this insightful blog, Kevin covers retail news, ideas, companies and emerging opportunities in Australia, NZ, the US and Europe. His international career in sales and marketing has seen him responsible for business in over 40 countries, which has earned him grey hair and a wealth of expertise in international retailers and brands. CROSSMARK Asia Pacific is Australasia’s largest provider of retail marketing services, consulting to and servicing some of Australasia’s biggest retailers and manufacturers.