Commercial Leadership

Manufacturers and retailers have spent decades battling to increase their respective shares of the value chain. Manufacturers’ early consolidation and superior endconsumer knowledge gave them an initial advantage, and more recently they have begun developing direct-to-consumer operating models in pursuit of further gains. Meanwhile, retailers have themselves been consolidating, are continuing to build their private label franchises and are starting to exploit shopper data to greater effect.

This battle has now reached a critical point. Backed into a corner by increased discounter and online competition, stagnating consumer spending, and a lack of emerging market growth opportunities, many retailers are fighting for survival. They are feeling compelled to compete more aggressively than ever on “value”, creating downward pressure on margins already squeezed by commodity cost increases.
Improved negotiating capabilities are allowing retailers to pass on this pressure to their suppliers.

This presents manufacturers with a significant challenge, but also with an opportunity. As retailers start to reallocate shelf space between manufacturers, there will be winners and losers: those with the strongest commercial capabilities will gain at the expense of their competitors.

This paper highlights Oliver Wyman’s perspective on how manufacturers should respond by achieving “Commercial Leadership”, and explains how our unique approach can help tap into hidden sources of organic growth.