The ‘B’ Word now looks sets to define a general election and continue to shape our political climate for years to come. The Tories lead in the early polls looked substantial enough to ensure that Boris’ deal could get through parliament. However, with a ‘Remain Alliance’ starting to form and Labour trending upwards the possibility of a no deal looks increasingly less likely with only an improbable Brexit Party victory threatening that.
The potential implications for suppliers to the UK retail trade are starting to become clearer.
With both Sainsbury’s and Lidl contacting suppliers over the past weeks to reinforce their current agreements regardless of the tariff outcome, it is clear those suppliers importing from outside the UK will be asked to absorb these new, yet unknown, costs.
Sainsbury’s’ Commercial director Paul Mills-Hicks wrote to suppliers last week asking for confirmation that they would continue to serve Sainsbury’s with delivery duty paid (DDP) regardless of whether the UK leaves the EU with a deal. This demand will of course directly affect supplier margins and the potential mitigating actions could mean cost price changes throughout the value chain.
For all the talk of Brexit readiness within organisations we know your customers have been aware of these potential and demanding new changes and have been working flat out to recruit, reward and retain the best talent in the affected functions to be ready for whatever the outcome may be.
One area that this is certainly true of and is already being demonstrated is the activation of their commercial negotiation strategy. The Sainsbury’s and Lidl communication will have formed part of their negotiation strategy – an agreed internal pathway to negotiating successfully. We have observed several tactics being deployed by the retail trade including pre-conditioning, positioning and anchoring.
To ensure value creation as you go into this crucial new phase of trading it is essential your commercial teams have a well-constructed negotiation strategy and are able to recognise these tactics. Using the following Negotiation Planning Model, we know that 90% of your time investment should be in preparation and only 10% in the executing of the negotiation.
Following these steps will stand you in better stead over the coming weeks.
#1 Discovery Phase – Setting objectives, timeframes and assigning individual roles
#2 Building the Strategy – Risk assessments, Power Analysis and the valuation of the deal
#3 Tactical Planning – Scenario mapping, contingency actions and problem mitigating
#4 Conducting a Negotiation – How we behave, what we say and what we do
No one can say for sure what the landscape post 31st October will be but before that it is highly likely that more UK retailers will follow Lidl and Sainsbury’s’ lead. If you would like to to find out how the Kantar Organisational Performance Team can help your commercial teams plan and prepare for these uncertain times, please drop us a note with your question on the below link and we will urgently get back to you.