THE AUTUMN ROOM

00:00:00: The German grocery market is worth over two hundred and fifty billion euros, controlled by four retail groups.

00:00:09: I spent sixteen years inside three of them as a buying director at Edeka, Eva & Lidl.

00:00:17: This is Decoding German Retail What nobody tells you.

00:00:24: So welcome back to decoding german retail.

00:00:28: This is the first episode of the season two finale trilogy.

00:00:33: If you have followed this season, You know we spent recent episodes Mapping how the German retail landscape actually works.

00:00:42: The five groups...the trade show floor.. ...The myth.... The state-of-the Union!

00:00:48: The ten week countdown to the negotiation Now?

00:00:54: The countdown is over.

00:00:56: The mutations ran out three weeks ago.

00:00:59: The first calendar slots are booked.

00:01:02: The autumn phase is live this fall.

00:01:06: This episode exists because most international suppliers believe the annual negotiation in a meeting A room with spreadsheet, a buyer and good cup of coffee or a bad one.

00:01:18: You wouldn't know.

00:01:20: It's not!

00:01:21: The Annual Negotiation is sequence of parallel processes that run inside a German retail headquarter for about eight weeks straight and only about twenty percent of it happens in the room you are sitting at.

00:01:38: Today I want to show you with each other eighty percent, five things that already happening right now this week inside every major German retail headquarter That shape what will experience your meeting before walking through door.

00:01:57: Five signals, fifteen to eighteen minutes.

00:02:01: If you're heading into German Negotiation between now and December this is your situational awareness briefing Signal one the budget that just landed on your virus desk.

00:02:15: right Now in every German retailer The quarter four targets And the preliminary next year Targets have been cascaded down from the executive board through the buying directors to individual buyers.

00:02:33: Each buyer opened an email in the last two weeks.

00:02:36: that said, deliver and additional two or three percent of margin from your branded portfolio In the upcoming negotiation cycle.

00:02:47: That number is not negotiable inside the retailer.

00:02:51: It came from above And it will be measured next February.

00:02:57: Which means when you walk into their meeting your buyer is not asking themselves.

00:03:02: How do I get a fair outcome with this supplier?

00:03:06: They are asking themselves, how do i close another point four percentage points of margin from this specific supplier to hit my quarter-four number.

00:03:18: The person across form you.

00:03:19: it's not the enemy they or somebody carrying a quantified target into conversation where you carry at defensive position understand what number they are carrying, and half of the meeting decodes itself.

00:03:36: Signal Tooth The category review committee in their room next door or prior to your meeting While you're at a meeting with your buyer.

00:03:46: somewhere down this same hallway there's a Category View Meeting running in parallel Sometimes for your category sometimes For the Adjustment one sometimes for the private label range that competes directly with your brand.

00:04:04: This committee is where listing decisions are made, not the everyday negotiation over promotional pricing – The bigger question!

00:04:12: Which brands stay on their shelf?

00:04:14: Which brands lose faceings?

00:04:17: Which Brands get replaced by an extended Private Label Range we're building?

00:04:29: Some are from private labor development, relevant buying directors and often a representative of the Chopin sales team.

00:04:36: They meet weekly during the autumn phase.

00:04:39: they work through a rolling list And decisions I make in September or October become contract letters that go out in November and December.

00:04:48: Here's the uncomfortable part.

00:04:51: If your brand has been discussed in that committee, and the last two weeks The outcome of your negotiation is already largely determined before you walk into a room.

00:05:01: Your meeting is confirmation ceremony not decision moment anymore Which means one very practical thing if You want to influence their committee?

00:05:12: You cannot do it through buyer alone!

00:05:15: You have to have relationships wider than That The head of category with the Shopping Insights team, people who sit in that committee when your name comes up.

00:05:27: But this is not as easy to think.

00:05:30: so the buyer is a messenger inside the company for you.

00:05:37: Signal three – the regional layer.

00:05:40: nobody wants international suppliers about.

00:05:42: If you come from a country where retail is centralized like France or UK and Netherlands Germany looks the same as the surface.

00:05:52: Five groups, central headquarters one negotiation per year depending on the product group.

00:05:59: that model is wrong.

00:06:01: Erika has six regional cooperatives each with its own buying board Each with a right to deviate from Central Assortments.

00:06:10: River has six region bindings as well plus river dogmunk As a distinct case.

00:06:16: Even the seemingly centralized groups have regional dynamics that matter.

00:06:21: What this means practically is your central negotiation in Hamburg or Cologne, it's only part of a story.

00:06:31: In these same weeks when you're center buyer is preparing to see cross from you The regional buying meetings are happening in parallel Making decisions about which products the region wants keep Promote de-prioritize, or even delist locally.

00:06:52: You can have a perfectly good central outcome and still lose thirty percent of your volume because two regions decided to shift promotional focus toward competitor product –or their own private label–.

00:07:07: The Central Negotiation gives you the frame, the Regional Layer gives you reality… And most replies only manage the Frame!

00:07:18: Signal for the Silent Listing Trigger In every major German retailer.

00:07:23: there is a document that most suppliers do not know it exists.

00:07:28: It has different names in different houses, sometimes it's spreadsheet and sometimes it slides into the category review deck.

00:07:36: Sometimes its simple internal list The delisting candidate list.

00:07:45: It ranks the brands in a category by their contribution to shelf productivity, their strategic role and their replaceability.

00:07:53: The bottom third of that list is the pool from which delisting decisions are made during this fall – during autumn phase.

00:08:01: Here's what you need to understand.

00:08:04: Being on that list isn't a warning shot.

00:08:07: Nobody calls you and says look just show now You're on our Delisting candidate lists.

00:08:14: You find out when the December contract letter arrives and The number of listed SKUs is smaller than last year.

00:08:23: The way to know whether you are on that list Is not to ask your buyer.

00:08:28: They will NOT tell you Even if they could, the way TO KNOW is To look at three internal signals you can measure yourself.

00:08:38: One Have Your Shelf Productivity Numbers Declined relative to the category average for more than two consecutive quarters.

00:08:47: Know your numbers, too.

00:08:50: has your promotional participation been reduced and the past six months without a clear commercial reason from your side?

00:08:58: Three have you're meetings with a buyer being shorter less frequent or rescheduled more often then in the previous cycle.

00:09:09: If two of those three are true, you're almost certainly on the list and have six to eight weeks to change the conversation before a December letter arrives.

00:09:21: Signal five The Autumn Letter That is being drafted right now.

00:09:27: Every German retailer sends out a framework letter in September-October addressed its major branded suppliers.

00:09:35: The letter looks generic.

00:09:37: It talks about market conditions, consumer pressure, cost of goods inflation, private-level evolution and the retailers' expectations for upcoming year.

00:09:51: Most suppliers read it once, shrug and pass to their key account manager with a note saying... Hmmmm same as last year?

00:10:06: More or less!

00:10:09: was discussed in a central strategy meeting before it went out.

00:10:14: Every emphasis is deliberate, every mention of the specific partial point is a signal about what retail will bring into your specific meeting.

00:10:26: If the latter emphasizes cost-of-goals inflation The retailer's preparing to push back on any price increase you request.

00:10:35: if it emphasizes private label evolution The retailer is preparing to threaten the listing as a level for margin concessions.

00:10:45: If it emphasizes shopper trading down, the retailer is prepared to argue that your brand needs to defend its premium position with additional promotional

00:10:55: support.".

00:10:56: The latter is not decoration….

00:10:59: It's the map of the coming negotiation published openly and ignored by ninety-nine percent just as an educated guess.

00:11:11: The suppliers who read it carefully though, underline what is emphasized and prepare their responses to those exact points walk into the meetings twenty minutes ahead of the supplier's who did not.

00:11:26: five signals budget on your bias.

00:11:30: desk category committee room next door regional layer running in parallel silent delisting tracker The autumn ladder being drafted right now.

00:11:47: None of these five are visible from your side on the table, never!

00:11:52: All five are shaping what you will experience in a new meeting.

00:11:57: If we take one thing for this episode let it be this... for eight weeks straight.

00:12:16: The meeting is where the outcome is confirmed, not created which means your preparation cannot be about the meeting alone.

00:12:28: It has to be above five parallel processes that run around it.

00:12:32: That's a bigger job than most supplier teams organize For Which is why results across market look like they do.

00:12:46: Two more episodes in this trilogy.

00:12:49: Next week, Why Germany Stays a Toughest Grocery Market In the World.

00:12:55: The Week After Ten things I wish someone had told me and sixteen years on the buying side This has been the first of three.

00:13:05: Thank you for listening today.

00:13:08: If this episode was useful And do want to go deeper On the German retail landscape i've put together A short companion brief that pulls the whole picture together in one document.

00:13:21: You can find it at insights.wfr-advisory.com.

00:13:27: The link is also on this show notes, It's free!