What Grocers Want from Their Consumer Products Suppliers

There’s always something to see and learn at the Food Marketing Institute (FMI) Midwinter Executive Conference, and this year is no exception.

PepsiCo is hosting a kick-off mixer where attendees can meet Hall of Famer and NFL legend Dan Marino and possibly win tickets to Super Bowl LIV. The show floor will showcase kitchen demos, dine-around events, and sample menus featuring a broad range of new consumer products that will soon reach retail shelves. FMI is a feast for the senses, but it’s also a time of shared priorities, for both grocery retailers and consumer products suppliers. Although 10 to 30 percent of a consumer products manufacturer’s growth is expected to come from a direct-to-consumer model over the next five years, 90 percent of sales are still captured in a physical store.

Is it possible to have a strong relationship between retailers and their consumer product suppliers? Absolutely! It would be fair to say that such a partnership is as relevant as it has always been. But to ensure both sides benefit equally, the value chain needs to be integrated in a way that fulfills customer demand seamlessly and profitably.

At FMI Midwinter, we are diving into the relationship between grocers and their consumer products suppliers. Here’s a preview into what we see happening in the industry and how the right best practices can help build a future of prosperous partnership.

Retailer Wish List for Consumer Products Suppliers

The common denominator between consumer products suppliers and grocery retailers is clear. To survive, they must attract, delight, and engage consumers with the right shopping and product experiences.

Consumers ultimately vote with their wallets. They want more control, greater customization, and differentiated service – and they will switch brands at any time to get it. In fact, SAP analysis based on public information revealed that 94 percent of consumers are willing to pay for a better experience. Meanwhile, 59 percent of shoppers expect personalized offers to be delivered in real time.

How can your consumer products business take the necessary steps to innovate and collaborate with retail customers as you work toward understanding and serving consumers better? It’s all about building solutions that address three top priorities on every retailers’ wish list.

1. Efficient, Effective, Agile Supply Chains

Consumers no longer want to buy products; instead, they seek to be inspired, guided, and educated by retailers and product brands that share their values and earn their trust. Whether focused on health and wellness, security and control, environmental sustainability, or social awareness, consumers expect retailers to know how their suppliers source, manufacture, and transport their products.

The agility and efficiency of the supply chain are critical to the success of consumer products companies as well as their retail customers. By tracing each step of the product journey from raw material sourcing to shelf placement, consumer brands can give retailers the proof that consumers demand. Sales associates can share how the products deliver expected outcomes and are produced under everything from environmentally sustainable processes to fair working conditions.

The calibration of supply chain operations is another mandate from retailers. When consumer brands respond quickly to changes in demand and regulatory requirements while maintaining competitive prices, retailers can ensure that the inventory fulfills consumer needs at a reasonable price and with compliant and safe ingredients.

2. Consumer Experiences that Blend Digital and Physical Engagement

Consumers reward brands and retailers that help them navigate endless aisles of choices to select an option that is best for them. They no longer distinguish between digital and physical channels. Instead, they expect to move seamlessly between the two experiences with a high level of consistency, speed, and relevancy.

In response, retailers are intensifying their efforts to deliver experiential and fluid moments. These experiences may or may not take place in a store and result in a purchase. However, retailers know that such a curated, guided relationship will result in long-term loyalty.

Consumer products brands can support this approach by realizing the potential for deepening the consumer base. The key is to broaden the market strategy beyond just selling products. Innovating complementary content and services – such as auto-fulfillment subscriptions, data-driven mobile apps, or personalized formulations – can help build a brand that can be integrated into consumers’ lifestyles, making the product (and potentially the retailer) indispensable.

3. Feedback-Inspired Innovation

Traditionally, the concept of “innovation” is synonymous with refining product design and recipe formulation. But recently, consumer products businesses have been going a step further by experimenting with engagement and point-of-sale models and addressing the needs of small or often ignored consumer segments.

But don’t be fooled; retail customers can play a distinct role in such innovation. Coordinating retail partners along with distributors and online networks allows consumer products companies to see how all elements of the consumer experience impact each other as well as profitability, revenue, and growth. Plus, retailers can share their insights – plus direct feedback from consumers – to help uncover new opportunities early on and mitigate emerging risks proactively.

By letting retailer and consumer feedback inspire innovation, consumer products companies can provide experiences that are beloved, valued, and profitable, as well as simple, agile, and transformational.

Consumer products suppliers and retailers are at an inflection point driven by consumer evolution and a nearly impossible-to-predict direction of change. But when suppliers assist their retail customers’ efforts to engage consumers and promote their products, a partnership of top-line revenue growth emerges.

SAP at FMI Midwinter

How are you working with your retailers to support your brand strategy? Come and visit SAP at FMI to explore how the latest technologies and value-chain integration models can help offer the products and services that consumers demand while helping retail customers prosper.


Harris Fogel is global vice president of Consumer Products at SAP.
Paul Larson is an industry executive advisor for Consumer Products at SAP.