UAE. Leading grocery retailers in the UAE have ranked two regionally-based suppliers among the best performers in the region, but a large gulf still separates them from the top two - P&G and Unilever.
Saudi-based dairy manufacturer Al Marai and regional distributor Al Seer were both ranked in the top five for overall service to retailers in a new survey by Kantar Retail Middle East. Al Seer is rated third for overall service (47%) for its strong merchandising and customer teams – both of which are important factors to stores in the UAE. P&G and Unilever came joint top in this area with 74%.
Good quality marketing and strong merchandising are what matters most to retailers in the UAE, according to the first Voice of the Trade survey for the UAE. At head office level, marketing came out on top at 63% and at store level merchandising scored the highest at 60%.
Al Seer was rated third (38%) in the suppliers with the most innovative marketing approach, behind P&G (63%), who were praised for their in-store theatre and participation in retailers’ literature, and Unilever (75%) who were out in front.
Al Marai is a notable entry in the ‘most important consumer brands to retailers’ area as it was the only regionally based manufacturer to be named that does not fall into the global brands category. The supplier is also ranked as one of the best in supply chain management (25% at head office level and 21% at store level) for providing consistently on-time deliveries and for hygiene and cleanliness in transit, delivery and merchandising.
While benchmarking studies are common in developed FMCG markets around the world, this is the first time one has been conducted in the Middle East with grocery retailers. The findings make essential reading for suppliers who will need to adopt a more sophisticated approach to meet the needs of retailers or become increasingly isolated by their competitors. The survey reveals three distinct opportunities for suppliers:
• Integrated customer teams – best in class suppliers are those who can offer an extended mix of contacts to retailers in areas such as marketing, logistics and finance.
• Operational compliance – a well-resourced and good quality delivery and in-store team, supported by a tightly managed sales operation is of high importance. As some decisions are still made at store level, there is an opportunity for suppliers who are strong in this area to influence their brands in store.
• Engagement with customers’ shoppers – suppliers who can convert shoppers’ buying behaviours into actionable insights are likely to enhance their credentials in the future.
As economic growth continues to slow down in the UAE, more retailers are downsizing stores to offer ‘convenience’ shopping in residential communities and apartment buildings as opposed to large retail outlets. This shift in strategy means retailers are looking for suppliers who can add commercial value and good operational service – something retailers state in the survey is in short supply.
Large retail chains such as Carrefour, Spinneys and Lulu are growing in terms of store numbers and in their overall share of the maturing UAE grocery retail market. As they rapidly steal share from smaller ‘traditional trade’ store formats, Kantar Retail experts claim the commercial significance of the supplier and retailer relationship is becoming more important and is being closely analysed by both parties.
Andy Williams, Regional Director – Kantar Middle East, said: “The findings suggest that grocery retailers within this market value the strategic contribution of suppliers at a Head Office Level while having robust operational teams with frequent contact is a clear differentiator at store level. The implications are that suppliers have to be strong in both areas to develop the most effective collaborations with their retail partners”
Andrew Mardon, Consultant – Kantar Retail Middle East, said: “We have built a matrix of what is currently important to retailers and what is the ‘best practice’ that drives such positive evaluation of suppliers. This insight is particularly useful in this region where this type of evaluative data is not readily available.
“Essentially, this should help suppliers assess where their investments in terms of time, money and people are best spent within this sector of the industry. By understanding what other suppliers are doing particularly well it should also provide some stimulating internal discussions about driving efficiency, growth and engagement with retailers.
This can only be seen as a step in the right direction for the supplier, the retailer and ultimately the shopper too.”
Kantar Retail Middle East intends to develop the findings further so that suppliers can also evaluate retailers across a range of criteria. Experience from Kantar Retail experts in other markets has shown that a greater understanding from both parties can drive positive change and better collaboration.
About Voice of the Trade
The Voice of the Trade report is inspired by Kantar Retail’s PoweRanking® Survey. Kantar Retail sponsored the first PoweRanking® survey in the United States in 1997. The Survey originated from its industry benchmarking studies on Category Management and Trade Promotion management which, for the past 17 years, have provided insight into industry best practices in these areas.
The objective of the PoweRanking study is to research and benchmark how retailers and manufacturers evaluate each other in the most important areas of the manufacturer/retailer relationship. This is the 360 degree dimension that Kantar Retail Middle East aim to develop the Voice of The Trade Report into in the coming years.
About Kantar Retail
Kantar Retail (www.kantarretail.com) is the world’s leading shopper and retail insights and consulting business and is part of the Kantar group of WPP. The company works with leading branded manufacturers and retailers to help them transform the purchase behaviour of consumers, shoppers and retailers through the use of retail insights, consulting, analytics and organizational development services.
Kantar Retail tracks and forecasts over 1000 retailers globally, has purchase data on over 200m shoppers and among its market-leading reports are the annual PoweRanking survey (USA and China), and Industry Shopper Study Across Retailers. Kantar Retail works with over 400 clients and has 20 offices in 15 markets around the globe.