In a tough economic environment, businesses are seeking ways to trade more profitably, growing both revenues and margins while balancing competing priorities. This is difficult to achieve without skills and a growth mindset.
The SA FMCG trading environment is tough for everyone: cash-strapped shoppers curbing their spend on household groceries, retailers forking out billions on alternative energy solutions to keep their stores open, and suppliers confronted with escalating input and production prices, impacted by global geopolitics and supply chain challenges. Amid fierce price competition, promotional pressures, and increasing trade discounts, FMCG suppliers are struggling to grow both sales and revenue.
One promising route to more profitable trading is net revenue management (NRM), a set of methods to maximise revenues and profits by managing various factors that affect net revenue – for example, by optimising pricing, promotional, and revenue-generation strategies. It requires a whole-of-business approach that involves data analysis and the use of insights to improve profitability, while also taking into account drivers like shopper behaviour, market dynamics, and the competitive environment. It is a holistic approach that requires businesses to understand and balance the sometimes conflicting demands of pricing, mix management, promotions, and trading terms.
It is a particularly effective and increasingly popular tool for consumer goods manufacturers but requires discipline and a team with commercial capabilities and the skills to implement. However, in South Africa, these skills are often lacking among suppliers’ customer teams. “This is not purely as a result of poor educational opportunities or inadequate training programmes,” explains Andrea du Plessis of Trade Intelligence. “Often, we see a legacy mindset, where business used to be done with a nod and a handshake. But in today’s more competitive environment, customer teams need a commercial understanding to get the most out of a trade negotiation.”
Trade Intelligence offers products and services that support businesses as they embark on their NRM journey, including detailed profiles of each of the major retailers, overviews of the South African trading context, reports on local and global trends in FMCG, and comparative data on the major players in the industry. The business, which has been providing actionable insights to local FMCG suppliers for twenty years, also offers a comprehensive suite of capability building products, from public-access workshops to bespoke sessions for leadership teams.
One popular programme is its Trade Maths programme, which directly addresses the lack of commercial skills among customer teams. Trainees sometimes come onto the programme without even the ability to calculate percentages. “Then we see a light go on,” says Du Plessis. “They leave empowered to bring actual numbers into their trade negotiations and their day-to-day duties.” The programme also supports the whole-of-business approach required by NRM. “The training was very relevant to category management, sales and customer engagement,” says a Key Account Manager from a major pharmaceutical supplier. “It will help with negotiations, CatMan, ROI and
stock on hand.”
Profitable trading in a tough competitive environment is a sticky problem to which there is no single silver-bullet solution. But whatever the preferred strategy, an underpinning of insights and skills has a critical role to play and is an investment every business needs to make. For more on the Trade Intelligence Capability Building solutions, click here.
About Trade Intelligence
Trade Intelligence is South Africa’s leading source of consumer goods retail research, insights and capability-building solutions that enable effective and profitable trading relationships and inform future-fit strategies.
Ti’s expertise covers the FMCG environment, the major retail and wholesale players, the informal retail channel as well as emerging retail and shopper trends.