are supposed to maximize on customer satisfaction by ensuring that customers get the highest quality products with the highest kind of customer service and shopper experience . A retailer is supposed to act as the point of contact between the customer and the supplier . Retailers are the people suppliers depend on to launch new products and help them promote as well as advertise their products .
In recent years , the number of products being taken to the retailer for distribution is higher than the available shelf space . The hardest task for a retailer seems to be choosing the product to have on shelf out of the ever-increasing products from the suppliers . Suppliers on the other hand are really fighting to have one or two of their products listed with the retailer .
The increased levels of competition between suppliers to have their products listed with the retailers , has given retailers more bargaining power which makes them push for crazy deals to have your product on the shelf or get it out altogether . This has led to unbalanced power play between suppliers and retailers .
With this , suppliers seem disadvantaged by the power the retailers hold . Being in a position to negotiate for better deals with different suppliers , gives the retailer the power to play around with product pricing , without considering the impact this has on the product value , supplier profitability and the industry in general . All the retailers seem to care about is fulfilling consumer surplus . The retailers don ’ t seem to understand or care how their distortion of the product recommended price by the supplier affects both the retail and supplier competition , how demoralizing it is to the supplier to keep on innovating new and better products and how the price wars drive the small and upcoming suppliers out of the market .
In such a chaotic place to be in , either as a supplier or a retailer , only one party determines who has the true power in the market , the customer or the final consumer of the product . Consumer preference is the only thing that determines who stays and who leaves . So , suppliers have a duty to ensure that the consumer chooses their brand over any other at whatever cost and the retailers have the responsibility to ensure they are the retailer of choice to the shopper .
If a consumer is willing to switch a product in the same retailer for another product , then as a rule of thumb , the retailer has the power and if the same consumer is willing to switch retailers for the same product , then the product has the power , thus transferring the power to the supplier . So , the retailer and the supplier have a duty to differentiate themselves and be the preferred choice by the consumer .
The retailer has a responsibility to ensure they are the most differentiated in the market , this will make it easy for a consumer to switch a product over a retailer since the cost of switching is minimal . On the other hand , the supplier has to ensure that their products are highly differentiated such that the consumer is willing to switch stores and look for the product wherever it is , or even , postpone the need for the product until it is back to the market because the costs of switching brands are high .
The degree of differentiation among retailers and suppliers determines the balance of power between them . If retailers differentiate themselves then they will not be worried of unhealthy competition from other retailers and if the products are highly differentiated , then the worry of price wars will be long buried . Customers will choose what serves them well , not what is being sold cheap .
Unfortunately , todays retailer and todays supplier is either too lazy to come up with products that clearly speak for them or about them or too demotivated to invent and innovate . Each party seems to be deeply invested in the competition on who has the lowest prices , giving birth to the unending price wars . But as nature dictates , only the fit and the ready survive and dare to play .
Daicy Munee is an MBA finalist student at Kenyatta University majoring in Strategic Management , currently working at Capwell Industries Limited as a Key Accounts Manager . You can communicate with her via mail at : Muneedaisy @ gmail . com .