The Double Negotiation: The Art of the Internal and External Deal

0:07Emma Pacey:Welcome to Mastering Sales and Negotiations, the podcast for ambitious professionals who want to sharpen their skills, transform their conversations and deliver lasting commercial impact. In today's episode, we're joined by Emma Pacey, Trading Director at one of the UK's largest supermarket chains. We explore the art of what we're calling the double negotiation. So the balance between driving hard bargains externally with suppliers and winning the hearts and minds internally across the business. Emma reveals how the best trading directors align competing priorities, secure stakeholder buy-in and bring multiple departments, category, marketing, finance and operations behind a single commercial strategy.

0:52Emma Pacey:We'll also uncover what separates good suppliers from great ones, why understanding buyer speak is a game changer, and how preparation and partnership can turn tough deals into long-term success. So whether you're in retail buying, procurement or supplier management, this conversation offers a rare behind-the-scenes look at the negotiations that shape what lands on Britain's shelves and at what price. So let's get started.

1:25Emma Pacey:Emma, welcome to the Mastering Sales and Negotiation podcast. Can you start by telling us a bit about your role as a trading director and what a typical day for you looks like? Each day, every day is different. That's part of the excitement of being in a trading role. But there are fundamentals that stay the same. So you need to understand how you're performing. So some of that will be looking back, but then equally you need to look forward as to how you're going to perform. So the role is really a mix of internal meetings and external meetings. As a trading director, you obviously own the trading strategy end to end, all the way through from buying, sourcing to executing.

2:02So you might have external meetings with suppliers where you're looking at product and looking at the strategy as to how you're going to work together. but equally you'll have internal meetings for how you're then going to bring that to life whether that be with marketing and how you're going to talk about it execution with retail and how it's going to land in a store as a director you will lead a team of anything between 20 and 50 depending on the size of your category so you've also got a lot of internal management and training

2:29Emma Pacey:with your team to do right okay that is quite a it's quite a varied role then isn't it i love that especially in my categories it can be anything from i can have a meeting one minute where I'm talking about the designs of our glassware for next year and what are the trend colours going to be, what are the patterns, to go in straight into what's the price of batteries in the market and what should we be doing. So it can be absolutely anything from really commodity lines, looking at price in detail versus like really nice design. How do we create a range? What's it going to look like? How are we going to display it?

3:05And then equally, I could go to the next meeting and be watching the next premiere of Wicked, of what's coming out, and therefore what dollar they're wearing, what they're wearing, what therefore do we need to buy. So it literally, especially when you're in a category like mine, can be such a varied role. There are then the harder bits of the role, which is you are missing your sales and budget. What are you going to do about it? It can feel quite tense and pressured.

3:32Emma Pacey:I think that's how you sort of think about it like that. You think that you're going to have these really hard negotiations with these big brands, et cetera. And you do. So you have hard internal and external meetings. And probably as you go up the chain of buying, you have more of the harder meetings and less of the nicer meetings. But what's lovely in my week is it's always got a few of those nice ones in and you can be having a really tough day. You've missed your sales. Suppliers aren't coming to the table where you want them to. It's taking longer to negotiate. And then you go into a meeting where you are looking at next year's bathroom designs and the team have nailed it.

4:11It's bang on trend. You can see that sales are going to grow and it just brings you back to that's why you do it. So yeah, you get the nice bits and the tough bits. As I say, the higher up you go, you certainly take more of that tougher conversation because you're obviously at the forefront. So they will bring you in then.

4:29Emma Pacey:So people will bring you in and think, right, this is not easy. yeah we're going to bring emma emma's going to have to deal with this yeah so in both ways so externally with the supplier we'll call it a top to top so if a negotiation's not going well it'll start getting escalated so my buying team might escalate to their senior buyer managers and if they still can't solve it then they'll then it'll get escalated to me to say either it's a tough negotiation or it's one of our biggest suppliers um and they are quite hierarchical the biggest suppliers so they want to be meeting with the directors um and rightly so because they will be a bigger chunk of our business will be a bigger chunk of theirs and actually it's worth more cash ultimately and therefore they want to have a more senior conversation but you are sometimes that's as i say a nice one because it is just they're a they're a big partner and therefore we do business at that level but sometimes it's where the team can't get cut through and they need to bring you to try and help either something's gone wrong or it's just not going in the way we'd want it to and you've got to try and help them help their supplier understand our business and why we can't do things in a certain way or why we need certain things so so when you're brought into those negotiations that have either stalled or they've hit some kind of on pass or it is the organizational structure that you've got to work within to enable to to get to that agreement how do you prepare for that what's the process that you go through to say well hang on a minute how am I going to get some movement here?

5:59Yeah so if it's one where the team have been struggling obviously the first thing is for the team to take you through what steps have you already made what conversations have you had why is it stumbling tell us about the supplier we'd always look if there's a relationship and a history we'd always look at what we've done with them before what get any data and analysis so one thing I'll always teach my buyers is a supplier will always prepare more than you and you've got to try and up your preparation to be equal pegging. They have numerous people supporting them, data facts. We have to go in with as much preparation.

6:33I'd always look at, so what have you done so far? When you try and understand why it's stumbling, you want to know why. Why is the supplier not leaning in? And sometimes it will be, it's just what we need to do and is not a possibility for them. But a lot of the time it would be that we've not got into the right conversation or we've not explained well enough, or my team might not have explained well enough, our business strategy and why we'd be asking certain things. So the other bit is really you've got to be honest with the why. So I always say to the team, a cold-faced negotiation is the hardest negotiation to do when you're just doing price of A, price of B, like you do on holiday when you're bartering it.

7:20there's no relationship it's a cost and it's price actually the better way of doing it is always to build that relationship and understand each other and explain the why so I would normally when I'm wheeled in as we call it the first thing I'd want to be doing is really starting to build that relationship and so understanding you've had a company you've been speaking to my team why is it not working what can we do let me understand why you can't move okay let me explain where our business is moving to where I see this growing the more senior you are you can also get across a little bit more of the how we can build a partnership and understand like how they're important they can be important to us as much as we can be important to them strategic plan of where you can go together yeah you can get it you can put more far more of a strategic vision um and equally the team will always be in my world because it's general merchandise will always be working at least a year out i will be working three to five years out so you can give them that longer term vision which obviously a supplier wants sustainable growth just as much as we do so so you just take that conversation up a level to then bring it back down to almost close the deal yeah so does that mean

8:27Emma Pacey:that some of the suppliers do they understand your business and what you've got to achieve more than others are some pretty blind to it and you think well don't you understand what we're trying to do here yeah absolutely and again if i talk about those bigger suppliers that want that are more of a partner. They tend to be the ones that understand our business better. That's either because they've worked with us longer or they've done their homework, as I just said. So the best of them will have been at our conferences and really taken on board what we're stating, what's our supplier strategy, what's our business strategy, trading strategy.

9:01And they will come to you and have tailored what they're offering you to match our strategy. So whether that be how we want to execute price promotions loyalty and they've tailored their offering and they talk your language they are the best suppliers that have prepared you the longer term that's easier for them because they've they've been through it with you and they're there you know you're speaking to them regularly they're understanding what has worked hasn't worked and they can tailor it back but also you get new suppliers that have really done their homework they've been in your stores it never bodes well if a supplier comes to see me that hasn't been in one of our stores and you can tell you can ask enough questions to understand and that that's a minimum for me of anyone coming in through that door that they know they've been in they understand your your execution because ultimately that's that's where it takes place so um but that yeah say the the best will have not only been in and visited but they'll have done their homework as i call it so they understand where the business is going how it's performing which categories do we seem to be excelling in not excelling in and and then they're coming to you to give you a solution because ultimately they're making your life easier this is what we could be doing this is how you could be executing it here's how it's going to grow your sales here's how it's going to grow your customers so really talking in our language and helping us is is definitely the best i think i think the kind of general perception the public perception if you will of of supermarkets particularly as a sort of buying entity is actually quite hard on suppliers.

10:36I know that may well be the case in some supermarkets and in some categories within those supermarkets. But I guess the idea of partnership and working together on a one-year plan, a three-year plan, a five-year plan might surprise some people that that's the level of relationship that you have. If you are talking to one of those new suppliers who has done the minimum, they've walked into the store and they've had a look around and seen where it might go on the shelf and what it's going to be with and how you're going to execute that promotional deal and all of that. How do you help them move up to be part of the longer-term plans?

11:18At what stage would you say, actually, these people know what we want and are part of the longer-term plan? Yeah, I mean, we've got suppliers with that that we've done recently. So often a supplier will first get in with you by either running a promotional or a set-by for a certain number of weeks to see how it does. Do our customers like it? Does it sell for us? When they execute that well, the next stage for me would always be to go, well, why is it not part of our continuous range? Which is ultimately what the supplier wants. So they get 26, 52 weeks of a year on shelf. And then that's when you then start needing to have a longer conversation because actually it's making sure they're going to have basics there like availability.

11:58so are you going to be able to serve our inbounds and then you start looking at those key metrics what is their inbound performance so it's not just about the price of the product but if I haven't got the product it doesn't matter how cheap it was in the first place it's much easier when you do a promotion because they're doing often maybe a one-off drop you do it, you sell it how do they react to that? so again, when you're doing those first drops you want them to be as passionate as you are about how well it's doing so the suppliers that are monitoring the sales themselves Our suppliers will, in both business I've been in, have access to understand how their products are performing.

12:32Are they aware of the inbound availability? Are they, you know, you'll often have suppliers that have walked our stores and said, I can't see good enough availability, what's happening? Again, it's always good to know that they are as interested as you are on the performance. Say it works well, the next thing, as I say, is you then want to talk to them about that continuity. That then might still be quite transactional. It might be set products onto the shelf. Then the next stage then is how do you unlock exclusivity? How are we going to be different? What's for us? Whether that be exclusive product, exclusive offers, how do we carve a point of difference with that supplier to our competitors because it is a highly competitive market and you've got to find a point of difference most of the time.

13:16Yeah, and it's also quite a small margin business in many cases. The whole retail is a small margin generally, but supermarkets are particularly small. margin is about volume isn't it it is about volume and actually um where the discounters have come into the market that's made that even tougher because they can work on a smaller margin because they have a much lower operating cost as you'll you'll know as a customer when you go in their far less skew count the more items you carry the harder it is logistically operationally to bring that to life and that has added in a complex layer of cost um that's what the customer doesn't of course like we have to make sure that we are still competitive but through a totally different lens and different buyer model the other thing that's within a supermarket whilst the net is low there are different categories that operate in different ways so I personally look after one of the higher margin because general merchandise is far less it's a very different buyer model sorry to food so actually one of the internal battles that i'll often have is is showing what i can bring to the total market so if we get the mix right with what i sell versus food actually helps the total category it helps the total business yes of course um so it is it is volume related as the discounters have come into the market they've obviously taken volume out which means that the top four no longer have as much volume as they used to have.

14:46And therefore, we've got to find a way of holding on to that. Because, of course, the buying 101 is economies of scale. The more you buy, the cheaper you get it. So that's like coming in as a buyer 20 years ago, it's the first thing you learn. And actually, what's difficult now is you can often be negotiating without a volume growth. So you've got to find a way of how do you get that volume growth. That might be less is more on our behalf. So actually, how can you take items out where they're actually cannibalizing their own sales? So actually you can still get volume growth, but you're getting it off less items.

15:21And then that changes the negotiation again as to is that all with one supplier or is each supplier getting slightly less items but more volume? So it completely just changes that mix. But that's what you have to constantly juggle through is what's the right number of items? to offer there enough choice but to not be splitting the volume. That's a lot to think about. It is. I was just thinking, I mean, we talk a lot about negotiable issues and how many negotiable issues there are. And it sounds to me like you've got an enormous number of negotiable issues. It's a lot more than I thought. And that is then magnified, like some kind of weird game of 3D chess where you're then thinking about that across a whole range of suppliers who are, to all intents and purposes, very closely associated with each other.

16:11You know, the same time as you've got one of these things on the shelves, you've also got that from their competitor as a general rule. How do you balance that in terms of your preparation, in terms of your thinking around that longer-term strategy and setting up that strategy with maybe those initial purchases from an individual new supplier or maybe from working alongside some of your more established suppliers? How do you keep that balance between all of those things at the same time as getting a good deal on volume and price and availability and exclusivity and, and, and? The basic principle is always start with the customer.

16:54Yeah. So if you start with the customer, who is our current customer? So we'll do a lot of looking at customer data. So the persona of our customer, who do we win and lose with, who have we got shopping and who do we need to attract. So if you start with that, then that gives you the basic of what you should have in your range. So coming into my current role, we weren't attracting enough families, young families, and obviously as your guess, quite easy to guess, but they would have the biggest basket in a supermarket. Yeah, of course. Okay, so you then need to look at your range mix to say, well what do they buy and what do I not have so start with the customer gives you that basic of what should be in my range you then look at the data on what you do have selling so all we'll always be looking at best sellers and we look at that from a number of angles where individual items obviously sales and profit you might have a line that is really needed in your range it's lower profit but actually it brings with it a more of the basket so you need to look at total basket analysis not individual items um you're then building that all the way back up to who supplies what in my particular world it's very different between categories you i have categories that are very heavily owned brand um and therefore you're very much curating the range working directly with with the factories to and you can negotiate almost against because it's they can both make the same item.

18:24I've got other categories that are highly branded. I've got, for many years, worked in the toy buying. So toys is absolutely at my heart. I love one of the best roles you could ever have. But ultimately, toys is actually even harder again because it's not about what worked last year because you've got to try and predict what's going to work next year. This one is really hard on a supplier point of view because actually who has the hot toy one year might not have it the next year. So you've got to keep the relationships going and it's not necessarily about one versus the other. So when you're talking about how do you decide who you're doing, you need to keep the partnership going, but you will see different numbers.

19:02So fundamentally, the first thing is start with the customer. Who are we targeting and what do they want? And then you work that back up to match back to, well, which suppliers can give us those items and what do I need to negotiate? And would you ever work with some of those established branded suppliers to actually kind of influence what's in their range, to share data in such a way that you say we think X, our research tells us Y is going to be really hot. What's the, or that there is a gap in this market. What's that kind of partnership relationship actually look like in practice? Yeah, again, very different depending on the size of the supplier and their knowledge.

19:45So your big brand of suppliers are as rich in data as we are on customer. Yeah, yeah. And they're ahead of trends that most of them will have global teams. So you'll obviously get global trends that are coming through. But actually on some of our own brand, smaller suppliers, absolutely. We will say there is a gap in the market for X. I can talk openly about wooden toys. So many years ago, wooden toys were only sold by the specialists. So at the time, Early Learning Centre, quite a high ticket item, not done en masse and not done at a discounted price. So actually, I spotted a gap in the market.

20:25So what I did was work with one of our current suppliers and factories that had that ability and produced and would to go, actually, how do we do this together? How do we source the right items and design to offer that to our customers at 50 % off what the current retail was? So smaller and own brand, you definitely, you're there going, there's a gap spotted together and work it through. But yeah, I'd say the big branded suppliers, they will on the whole have got so much rich data that you, that they'll bring the conversation. You might say, do you know what our customers, sometimes you might say our customers are really buying that in bulk.

21:02Can we offer them a bulk pack at a lower price? There'll be internal data sometimes that can lead to more individual items and what we might want to expand on. We know when we've done special edition flavors, they've worked really well, so how do we develop more of those? So there'll be some times that'll be the other way around as well. And that focus around that sharing of data, I suppose what I'm trying to get to is what's the level of trust that you need to have for that data to be shared as a genuine partnership, for you to basically open up and go, here's our research, this is what we understand about our customers, Is that a relatively low bar because you need to find that competitive edge and that's just the entry ticket to doing that?

21:47Or is that something which you actually guard quite closely because they're talking to every other supermarket as well? Yeah. There's a level of what you share, I guess, based on the simple way we look at it is what's common knowledge or what could you find out if you walked our stores or you did your own research. what's kind of already public what's in the public domain you've got to be very careful that you never share anything that is future of course GSCOP regulations will help us on that but from a sharing of actual sales that kind of data will often be only again it's all quite regulated so the suppliers that are working with us always have access it's a highly regulated market, so you can only share certain things.

22:41Yes, of course. We will always openly share where we're winning, losing, who our customer base is because we need our suppliers to know that, to cater their ranges and to work well with us. So I'll always be open with customer information. You would never share anything that's protected, but we overtrade with the older customer. and actually again you could probably research that yourself and find that so it's just that level of what do they need to know to help us mutually grow

23:18Emma Pacey:I'm just thinking back to the title of this podcast is about this idea of this double negotiation so you're also trying to negotiate internally as well and I'm just thinking from a marketing perspective you talked about that you want to appeal to that young family because they've got the biggest basket. But from a marketing perspective, would they say to you, well, we want to attract this customer. This customer is going to have things on the shelf that maybe not be the most competitive or it might be the most expensive. But if we don't have those things and they won't come into our supermarket, how do you deal?

23:53Emma Pacey:How do you then deal with that? Yeah. So the market, when you work for a big grocer the marketing team will have will be responsible for the customer proposition and the customer strategy so and and ultimately um I've worked for two of the biggest grocers who have slightly different strategies targeting slightly different customers so um we'll always no matter what team I work for you will always ladder up to the business strategy because that's who you're trying to attract as a whole you then take it down a level to then say well what's our part of the jigsaw so you can always look at this is the total business customer but who in our area who are we attracting because it can be slightly different and which role are we playing um i the internal negotiation for me is then how you can use the data to show marketing where we are bringing in a different customer and actually if you talked about my categories more you might get a different footfall through the door and you might or you might get an additional footfall through the door so it's actually you use the we use our own internal data to almost do an internal sell to say actually i can show you last time we did this we brought in x footfall and we can use internal our loyalty data to say actually x percent of them were new customers to us yeah you can all say x percent of them had an average basket of an increase an increased basket of x so you almost do that internal sell on this here this is how it led us to the total strategy but here's how I can help stretch that.

25:23Yeah, and something like that, the wooden toys example that you gave earlier, clearly that's targeted at a very particular demographic. First of all, families with young children and or grandparents of families with young children who have that desire for that sort of very kind of slightly recherche, slightly, you know, she-she toy that their kids want. Yeah, or environmental, actually. Or environmental, yeah. Because when we did that was when it was starting to be quite a big iron on wooden being better than plastic. So there's that whole sustainability thing in there. You've got different angles.

25:57So how much data are you, how much of that, I suppose, is kind of hard data, that we will get X proportion of this particular demographic through the door, versus my gut feelers? How do you balance that? Because there's got to be some of that stuff where you are actually backing an instinct. And absolutely, sometimes you're doing it for the first time. So the first time we did that, you don't have history. Of course. You'll always look at where you've done, what's the most similar you've done in the past, i.e. when did we last take a new market and half price it to whatever the rest of the market had always been at and what did it do for us?

26:34So you'd look for similarity to get some data. Or sometimes you are literally having to say, this is what we're doing, this is our gut feel. You are literally doing that. So we've just done something this week that's the first, for a while, we know we're going really sharp on price. We know there's a market demand for it just because we've not done it before. We know our customer. You can also look actually at customer data that goes, where is our customer spending when they're not spending with us? So if you look at credit card data, you can go, well, actually, if we know they're spending there, well, what are they probably buying there?

27:11So you can use external data as well, even if you've not got history yourself. but there is a lot of gut feeling buying and you have to get comfy with it you will for 10 things you get right you'll probably get one wrong and you have to just learn fast and move on and especially in some of those unpredictable markets like toys you will not get them all right so I always use the example many years ago you might remember there was an electronic hamster it was an absolute you could not get them for love nor money now who would have predicted an electronic camster was going to be the hot toy that year right so you know that

27:53Emma Pacey:thankfully back to some of our earlier conversation it was with one of the suppliers that we had a really really good relationship with so as it took off we obviously had our share but actually how do we make sure that we are the first as that stock comes in to get the availability and actually that supplier used to laugh by the end of the week they were calling me oliver because every morning i was phoning them see what stock had come in to make sure that we were first on their thoughts and actually we we won on we won on that line we got the highest market share but it's that relationship is what you then pulled on so we all we went in thankfully we did back it yeah but nobody backed it as big as it was but we were first to be actually how do we keep growing it so um but yeah it's sometimes that gut is right sometimes like that one we were We backed it, but just not well enough.

28:38Sometimes you completely miss a trick and you can't kick yourself. You can try and recover it. Can I join the pack? Can I get some of that? Or you've got to just quickly learn and move on and not kick yourself. And that idea of bringing in the electric hamster of 2026 or 2029 in your case, that idea of spotting that trend and all the rest of it, presumably at some stage you're also negotiating with other trading directors within the business looking after other categories. Absolutely, yeah. Because there's a pie, it's that big. How are we going to slice the spend, the promotion spend, the space spend?

29:18The biggest internal negotiation you have, so every category has their own range space, but you will know when you go shopping, the first thing you see is when you walk through the doors, which is the foyer. They are the hottest slots you can get. Of course. And of course, there are some big giant suppliers out there that you will be used to seeing when you walk in those doors. So the brands that you love and know really well. Now, obviously, they have got huge teams, huge marketing teams, huge budgets, etc. So quite hard sometimes, actually, for my categories to come up against those. And if you purely looked at sales number, you wouldn't.

29:53And this is where you do the internal negotiation on what point of difference that you can bring. and actually my categories tend to be truly incremental. You don't necessarily need general merchandise like you need to eat. So it can often stretch the spend and it can, as I said before, be at a higher margin. So the internal negotiation comes in on where can I offer a point of difference. So very well timed, Black Friday coming up. That's where general merchandise really comes to the forefront of actually a big sales period of people buying non-food items and actually very competitive. But how do we have our slice of that pie?