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Walmart, Kroger, Target, Safeway, Publix and Wegmans were cited as consistent top performers in the eyes of their trading partners since 1997, according to results of Cannondale Associates’ annual PoweRanking Study. In its 13th year of publication, the study, titled “The Cycle of Success,” also identifies top-performing manufacturers that have excelled over time, in the eyes of their retail trading partners. This year picks included Procter & Gamble, Kraft, PepsiCo, General Mills, Nestle and Unilever.
The annual benchmarking study, published by Wilton, Conn.-based Cannondale annually for the past 12 years, gathers information on best practices from manufacturers, retailers and wholesalers, with the trading partners ranking each other on strategic and business fundamentals. The purpose of the study is to identify those manufacturers and retailers that have been recognized by their trading partners as best in class, and to provide insight into what makes them the best.
The ranking criteria for the retailers include:
--Clearest company strategy
--Best at store branding
--Projected power retailers
--Best retailers with which to do business
--Best category management/buying teams
--Most innovative consumer marketing/merchandising
--Best supply chain management
--Best practice category management/CMAR
In addition, retailers were also evaluated on their cost management abilities, a metric first asked last year. These rankings weren’t included in the overall composite score
At the top of the 2009 PoweRanking’s retail leader board, Walmart captured the first slot by a wide margin and regained momentum with an eight-point gain, paced by runner-up Kroger, which overtook Target to take the No. 2 ranking. Costco and Publix, meanwhile, rounded out the top five, with Safeway, Wegmans and HEB close behind. CVS and Walgreens finished in ninth and tenth place, respectively, solidifying their positions in the Top 10.
“The retailers that excelled in the PoweRanking focus on value,” explained Cannondale managing director Ken Harris, noting that it comes as little surprise that the economy “had a profound impact on manufacturers’ perception of retailer performance in 2009. Value defines Walmart, but Kroger also did an impressive job this year by taking the value message to consumers and asking the manufacturers to support this effort.”
Customized questionnaires were developed for retailers and wholesalers in food, drug, mass merchandiser and convenience channels, and manufacturers in food, general merchandise and HBC. The questionnaires were mailed each spring from 1997 to 2009 to personnel at all levels of management, with the assurance of total confidentiality. To provide trended information over time, the PoweRanking measures are calculated on a rolling two-year basis.
For manufacturers, the PoweRanking study’s composite scores are based on rankings in eight key areas where manufacturers interface with retailers, including:
--Clearest company strategy
--Most important consumer brands for retailers
--Best combination of growth and profitability
--Best salesforce/customer teams
--Most innovative marketing programs
--Most helpful consumer/shopper insights and category management
--Best supply chain management
--Best shopper marketing programs
Procter & Gamble maintained its top-ranked position in 2009, despite a sizeable decrease in its PoweRanking composite score. At No. 2, Kraft’s overall score declined, but the company maintained its position from last year, while PepsiCo held onto the third spot, despite a slight decline as well. General Mills and Nestlé, meanwhile, had notable gains of 1.5 points and 3.5 points, respectively, to round out the top five. Kellogg also had a strong showing, advancing to the eighth-ranked slot, while ConAgra returned to the top 10 after a year’s absence.
“This year’s PoweRanking demonstrates the performance rotation of food companies that generally tend to perform better than nonfood companies in the survey during tough economic times,” said Harris. “It also signals the emergence of companies like General Mills, which has consistently performed well through the years, and is picking up momentum by continuing to execute the fundamentals well and focus on a few things better than its competitors.”
For the second consecutive year, Cannondale also included cost management as an evaluation for manufacturers and retailers, in light of the increasing importance of this discipline with the dramatic shift in economic conditions, although the rankings from this measure weren’t included in the overall composite score.
Collaboration was identified as the key linchpin for both short- and long-term success among trading partners, according to this year’s PoweRanking, which further pinpointed five supplemental traits common to the study’s consistent top performers: simplicity, consistency, follow-through, creativity and involvement. On the flipside, Cannondale indicated that lack of flexibility and surprises can undermine performance.
In this year’s survey, Cannondale executives sought to closely understand the key traits of the top-performing manufacturers and retailers that have consistently delivered mutually beneficial goals over time. “To be most effective, manufacturers and retailers need to empathize with their trading partner’s issues,” noted Harris. “The solutions must be solid, practical and real. Real collaboration comes when trading partners can take action on recommendations for mutual benefit.”
Through quantified analysis and many conversations, Cannondale identified the top five traits and the two “trust-busters” that can make or break collaborative relationships over the long haul.
To set the stage for long-term success, Cannondale offers retailers and manufacturers three recommendations:
--Communicate a short, simple message to trading partners
--Concentrate resources in a few areas to differentiate
--Drive actions linked to insights
A leading sales and marketing management consultancy with offices in Wilton, Conn., and Evanston, Ill., Cannondale is part of Kantar Retail, a unit of WPP that also includes MVI, Retail Forward, Glendinning, and Red Dot Square. In addition to the PoweRanking study, Cannondale publishes benchmarking studies on trade promotion spending strategies, category management/consumer marketing at retail (CMAR), and foodservice.
For more information or to obtain a copy of the Cannondale’s 2009 PoweRanking study, visit www.cannondaleassoc.com.