The tension in the room was palpable, although the tone of the meeting had been polite; almost too polite. Both sides had made their final positions very clear and there was a chasm which looked unbridgeable. The Buyer needed to protect the millions of shoppers who relied on his supermarkets for affordable food. The Seller knew that the catastrophic increase in the cost of ingredients and energy meant that without a substantial price increase his manufacturing company could go out of business and thousands of jobs would be at risk. The issue was not quantum; it was principle. For the Buyer, any increase in price was unacceptable. For the Seller, only a minimum sufficiency of increase would do.
There was nowhere to go with this negotiation except deadlock. Neither side would budge. One side or the other would have to take consequential action – either the Buyer would delist the Seller’s products or the Seller would unilaterally cease supply. Which of the two was largely cosmetic because the result would be the same. Shoppers would be saved from a price increase but denied access to their favourite brand. Everyone was going to lose, but no-one could think how else to move.
The Buyer and Seller agreed to close the negotiation down. The meeting ended at stalemate.
Two weeks went by. The Supermarket group extolled alternative brands in an advertising blitz. The Sellers financially supported other supermarket chains with whom they had no dispute by giving them advertising support, promotions and special offers.
Eventually, someone saw sense. A telephone call was made, and a meeting convened. One side or the other had to back down, and this time it was the Buyer, who recognised that the avalanche of cost of living increases the company was facing was unstoppable (and that because of them his/her neck was off the block). The Sellers agreed some token face-saving concessions; short-term exclusivity on a new line not yet launched and the abandonment of some outstanding invoices from long ago which in reality had already been written off. Supplies were restarted. Peace reigned.
Did it? If you were the Buyer in this scenario would you just take the medicine and move on?
We are emotional beings. We don’t like ‘losing’. But we are also rational beings. We like the idea that better process might bring better results. So here are 5 tips which might help if you find yourself in a Buyer/Seller deadlock situation and you don’t want just to back down.
- Revisit your data bank especially when times are uncertain. What used to be masses of useful historical evidence about the product and market will be largely redundant because of the new normal. Don’t rely on the past; start to collect new data PDQ, data which reflects today’s situation. Remember that data the other side relies on is now equally suspect so don’t trust it. It gives both parties room to reassess.
- Your relationships with your counterparties are possibly tenser than before. In the sense that if the circumstances of your relationship have changed then the relationship needs to be examined and renewed. If you have previously been either deliberately Nice or deliberately Nasty you might need to review that.
- Your skill set might need an overhaul. At least in the sense that your regular negotiating tactics might no longer be optimal, and the result will be deadlock. Before you use new ones which require different skills, for example more listening and less talking, you might like to try them out in a safe environment.
- Your KPIs might need reviewing. Shaving money and improving margin might now be second priorities to ensuring that you have stock on the shelves or the raw materials that enable you to continue to manufacture.
- Your supplier/customer choices might be too narrow, or at least severely depleted. Relying on a single/major supplier/customer is dangerous especially in uncertain times and it will be tricky forging new ones when the chips are down – now is the time to begin to court the people you haven’t contracted with recently as well as the ones you have.