Negotiation conflicts in retail - Professor Manfred Krafft in conversation with Radio NRW
Empty shelves in supermarkets are no longer a rare sight. Not only logistics problems and disrupted supply chains, but also the increased price pressure among manufacturers and retailers contribute to this. Due to rising raw material and energy prices, some suppliers are forced to increase their costs. This in turn leads to new negotiations regarding purchase prices or shelf space between retailers and manufacturers.
Many of these negotiations are positive and both parties accept the new conditions amicably. Other contract negotiations fail, however, because the stronger party insists on its modified framework agreements. This was also the case in the current negotiations between Coca-Cola and Edeka. Here, the grocery chain does not accept the price increases of the beverage brand, which leads to Coca-Cola no longer wanting to supply the retailer.
But who has the stronger negotiating power in such processes? "The retailer actually has the longer leverage," explains Professor Manfred Krafft in an interview with Radio NRW. "We have a 60% market share with the four largest retail chains, Edeka, Rewe, Lidl and Aldi, and suppliers can hardly afford to be discontinued," says the retail expert. However, the trade is also dependent on the supply. Customers will no longer approach the retail chains if particularly strong brands are discontinued, which could lead to a loss of sales. Supermarkets, which increasingly list branded products on their shelves, are particularly affected, whereas discounters with their own brands can control the negotiations themselves. As a rule, however, the delisting of branded products after failed cooperations is short-lived. After a short time, negotiations are resumed, as both retailers and manufacturers have no long-term interest in delisting.