P&G Expands Retailer Conversations Beyond Pricing, Promotions
Procter & Gamble is pushing for deeper, longer-term planning with retailers, with CFO Andre Schulten saying the strongest partnerships should extend beyond annual margin negotiations to three-year plans spanning retail media, in-store activation, innovation and supply chain operations.
Speaking this month at the Barclays Global Consumer Staples Conference, Schulten said those relationships work best when P&G and its retail partners first agree on a shared mission to grow the categories in which the company competes.
“Then it becomes, OK, what's the breadth of the value creation chain that we have available to us,” Schulten said.
That can open the door to a much broader set of conversations around how the manufacturer and retailer jointly drive growth.
Beyond a margin conversation on P&G’s products, it’s about innovation, he said. “It is on media spending and media activation. It is how we bring the product to life in-store and online. It's about the supply chain cost and the supply chain reliability and quality. Then, suddenly, you have a different conversation because you can create more value across a broader set of measures."
That enables the partners to created not a one-year plan, but a three-year plan, which allows them to make fundamental changes to the way they collaborate and operate.
Furthermore, Schulten said, strategic alignment at the leadership level is generally easy. “Operationalizing that alignment down to the buyer level, down to each department in their organization, our organization, is not that easy,” he said.
Also critical is an “escalation mechanism that very quickly allows us, when we see misalignment at the operating level, to elevate the conversation to leadership and resolve those issues not within weeks, but within days,” Schulten added.
“So, if you have alignment on the mission, you can turn that into a broader set of value creation. You have a three-year plan, and you can get out of operational issues quickly by elevating. You've got a best-in-class relationship.”
