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No More Backstabbing: How brands and retailers can earn each other's trust

August 30, 2012

It's become a downward spiral.

Lets face it; many retailers don't trust their brand partners, as they see their trading areas become increasingly filled with competitors. If that's not bad enough, the products they sell are showing up on e-commerce sites for slashed prices that the brick-and-mortar storeowner can't possibly compete with. On the other hand, brands are constantly needled for price reduction, special terms, or unlimited variations, while retailers complain that they are not developing enough different and new products to stay competitive.

Can each party change to end this worsening cycle?

It's about building trust. To begin re-building their retailer partners' confidence, manufacturers must re-gain control of their brand and implement policies to protect their brand's integrity. It takes discipline and work, but it's worth it.

Active brand management is critical, because it puts the distribution of a manufacturer's products back in the manufacturer's hands. If the manufacturer determines a certain quality of retailer (especially online) to partner with and sanction to sell their products - while stopping unauthorized vendors - the retailer partner can begin to trust their (partially) exclusive access to those products and that brand. And what little boutique in a small town wouldn't want to be confident in their safety from getting undercut by a price-slashing e-commerce site?

In addition to strictly controlling the use of their brands online (monitoring to be sure their products aren't getting ‘scraped' and displayed on other, unsanctioned retail sites), manufacturers should put in place balanced pricing policies. I know that's a lot to swallow. But setting a standard Minimally Advertised Price (MAP) policy - and tailoring it to balance pricing between brick-and-mortar retailers and Internet retailers - can go miles toward building trust with your longtime retail partnerships. Additionally, it will create parity within the marketplace, which is beneficial to all involved: your brand, the brick-and-mortar retailer, the Internet vendor, and the customer - who matters the most in the end.

Retailers, in response to these disciplined practices by manufacturers, should embrace the new pricing and content policies, and work together to police the marketplace when they notice unsanctioned activity taking place. When this kind of integrated model occurs, balance is achieved within the marketplace.

Trust is built through mutual support and collaboration. The only way manufacturers and retailers can win back each other's trust is to stop the bad or negligent practices that have become rampant in the industry, and start to work together, for one another's survival as well as their own.