News that the supermarket price war could force more than 100 food suppliers out of business was not news to key stake-holding NAMs...
In fact, anyone with a half-open eye on the UK retail trade will know that a package comprising Trade investment of 20%+ of supplier sales, Trade Credit of 45+ days and Deductions of 7% - all contributing to lower-cost food wastage in the home - can have only one conclusion…
Whilst Begbies Traynor, a corporate rescue and recovery practice, understate this via ‘experiencing financial distress’, being driven into liquidation, or ‘forced into going bust’ probably describes the situation in a way to which NAMs can more easily relate.
Given the price-cutting turmoil in the market, the key issue for NAMs is to establish the state of their own company’s finances, compare with other players in the category, and then find ways of taking remedial action.
In practice, this means accessing Companies House web-check service (online @ £1/company) and downloading your latest annual report.
Remembering that this is the version that the buyer sees, it helps to conduct the analysis from that perspective. In other words, the customer is not interested in the extent to which you are being driven towards the edge, but is more concerned with the resultant impact on continuity/availability…
You, meanwhile, will have the added benefit of category and customer insight from a supplier perspective.
As you check through YOY Sales and Net Margin, compare these with your performance with individual customers.
Next calculate average trade credit and compare with individual customers to discover the sources of your growing stress/anger...
Assuming that your ex-factory prices are - or should be - 50% of your prices to the trade, you can then calculate the impact of your trade investment on your net margins, on average, and using your detailed inside-knowledge, assess the extent of ‘fair shares’ incorporated into your individual trade partnerships.
A quick check on the open-domain finances of your category competitors will further confirm the fair-share splits by individual customers.
Finally, a checking of the customers’ finances will then point at key beneficiaries of the monies being squeezed out of your trade partnerships to benefit the consumer…
You are then in a position to ensure that - using open domain-fueled insight, and every tool in the bag - your company is going to survive...
After all, why go bust because your customer does not understand fair-play, or finance...?
In fact, anyone with a half-open eye on the UK retail trade will know that a package comprising Trade investment of 20%+ of supplier sales, Trade Credit of 45+ days and Deductions of 7% - all contributing to lower-cost food wastage in the home - can have only one conclusion…
Whilst Begbies Traynor, a corporate rescue and recovery practice, understate this via ‘experiencing financial distress’, being driven into liquidation, or ‘forced into going bust’ probably describes the situation in a way to which NAMs can more easily relate.
Given the price-cutting turmoil in the market, the key issue for NAMs is to establish the state of their own company’s finances, compare with other players in the category, and then find ways of taking remedial action.
In practice, this means accessing Companies House web-check service (online @ £1/company) and downloading your latest annual report.
Remembering that this is the version that the buyer sees, it helps to conduct the analysis from that perspective. In other words, the customer is not interested in the extent to which you are being driven towards the edge, but is more concerned with the resultant impact on continuity/availability…
You, meanwhile, will have the added benefit of category and customer insight from a supplier perspective.
As you check through YOY Sales and Net Margin, compare these with your performance with individual customers.
Next calculate average trade credit and compare with individual customers to discover the sources of your growing stress/anger...
Assuming that your ex-factory prices are - or should be - 50% of your prices to the trade, you can then calculate the impact of your trade investment on your net margins, on average, and using your detailed inside-knowledge, assess the extent of ‘fair shares’ incorporated into your individual trade partnerships.
A quick check on the open-domain finances of your category competitors will further confirm the fair-share splits by individual customers.
Finally, a checking of the customers’ finances will then point at key beneficiaries of the monies being squeezed out of your trade partnerships to benefit the consumer…
You are then in a position to ensure that - using open domain-fueled insight, and every tool in the bag - your company is going to survive...
After all, why go bust because your customer does not understand fair-play, or finance...?
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