Margin mud wrestling

I'm currently reviewing the performance of a major consumer good brand in the UK. It's very clear that together, FMCG and retailer companies have created a mighty interesting situation for themselves. In a bid to be number one, either product or retailer, they have price promoted their pants off. 


So now they are naked, with only a shred of margin for protection. 


In some respects the customer is a winner, with cheaper prices. But combined with private label, the resulting 1-4 brand category leaves very little room for innovative new products and economy-stimulating small business. A similar situation is facing the IT industry. I am all for market forces and pressure to force brands and retailers to innovate, adapt and streamline to be the best. May the best brands win. But as brands fight it out, there's a whole lot of margin being lost with the resulting instability for businesses and jobs. 


So perhaps the analogy is less standing naked, shreds tactfully poised and more...mud wrestling. 


It would be naive to think that it is an easy thing for manufacturers and retailers to have completely open, honest and productive conversations about what next. 


But I think that those that manage these conversations well, will win. 


Both sides have smart, customer focused people - if we stopped wrestling, perhaps we could create smarter, more resource efficient businesses that delight consumers. On both sides of the ring. 


Flickr image credit: Filippo Venturi