Flux in the retail sector is nothing new, but we’ve seen unprecedented changes in the industry in recent times. The proposed merger between Sainsbury’s and Asda sent shockwaves throughout the industry last year, while Tesco joined forces with European retail giant Carrefour. French supermarkets Auchan and Casino also partnered to jointly negotiate with their main food and non-food suppliers.

Joint negotiation is largely the point of these super-mergers. By creating a retail powerhouse, the supermarkets are looking to put pressure on manufacturers and brands to drive down prices in a bid to grow their business.

They are all too aware that growth is hard to come by in the current climate. Staying relevant is becoming harder in the face of so many challenges. Consumers are spending more time online, buying from specialists who put personalised customer experience at the top of their agenda, while loyalty to one retailer is all but lost as people shop across multiple stores in different formats.

Supermarkets are realising that joining forces with others, even if they are competitive, is more attractive than struggling on their own.

Retailer alliances can create cost efficiencies with suppliers of brands, leading to greater choice and lower prices for the consumer. But focusing on price alone is not without its challenges. It could see smaller suppliers being squeezed out, for example, in favour of global brands that have more negotiating power. In an age when niche brands are gaining favour among shoppers looking for local, specialist or ethical products, are we in danger of seeing big brands dominating store shelves once again?

During the price war years, we also saw aggressive price promotion tactics employed by retailers to boost to sales short-term. But over such a long period it simply led to the erosion of brands and margins.

Focusing on price as part of your growth strategy simply is not enough today, especially in the age of the discounters. Retailers must look to collaborate better with their suppliers to jointly get to a deeper understanding of how shopping behaviour is changing and what actions they both should take to drive growth. An understanding that can only be found in data.

The challenge of course lies in the huge quantities of data that both brands and retailers have at their disposal – and transforming this quickly into intelligence that they can act upon, whether that’s pricing strategies, marketing campaigns, new product innovation or changing product attributes.

When retailers share data, brands can better understand what shoppers are buying and what else they are buying in the same transaction, giving them a deeper insight into the actual impact of their marketing efforts such as price promotions or changes to their products.

For retailers it’s about looking at data in a different way, unlocking huge growth opportunities. For example, retailers can work with brands to find areas of incremental growth together and boost category performance. This would also enable stores to rationalize the number of products on shelves in order to cut costs and simplify the shopper experience.

When it comes to collaboration to improve performance, there are three key areas to focus on:

First, stress testing product price points through marketing mix modelling. A marketing mix model can help manufacturers identify where they can drive incremental sales through effective price and promotion strategies. For example, do manufacturers know how price elasticity, which can vary from one region to another, impacts the price point at which shoppers will switch to another brand or store? Or which product attributes are actually driving purchase? What about competitors? By analysing and understanding the whole category, manufacturers can gain insights into what works for their brands, as well as how a competitor’s marketing activity is impacting sales performance.

Second, manufacturers need to demonstrate exactly how their brand will defend or drive category growth to a retailer. Manufacturers know their products inside out, and retailers know how their shoppers are reacting to those products by tracking their changing shopping behaviour.

Finally, sustainability, food waste and packaging are all top of the FMCG agenda right now, with consumers increasingly aware of the environmental impact their purchases make. Three-quarters of shoppers prefer to buy products with environmentally friendly packaging, as well as brand characteristics like fairness, transparency and integrity, according to IRI’s 2018 European Shopper survey. Maintaining a sustainable business model that takes care of packaging, merchandising, pack size and so on, will become challenging for brands, without better collaboration with retailers.

In today’s challenging retail environment, data is knowledge and knowledge is power, so having access to the right data at the right time to make commercial gains is crucial for both retailers and manufacturers. Long-term strategic collaboration that involves sharing this data and knowledge will result in the best value for customers.