Beyond the price tag: the changing game of retail negotiations

Price remains central to supplier-retailer negotiations, but it is no longer the only deciding factor. As cost pressures and changing consumer expectations reshape the pet industry, commercial discussions are extending to innovation, supply reliability, marketing and sustainability.

Complex negotiations

France’s Federation of Commerce and Distribution (FCD) teamed up earlier in the year with five major retailers, including supermarket chain Carrefour, to release data on price negotiations. According to the FCD and those companies, “without commercial negotiation from retailers, a basket of 12 products would cost 37% more” than the price paid by consumers in store.

“The entire difference between the prices asked and the prices charged on the shelves was negotiated by the distributors,” the FCD said. The analysis aims to shift the focus of criticism regarding price hikes away from retailers.

However, setting responsibilities aside, it seems that negotiations are perhaps more crucial and complex than before.

While inflationary pressure is an outside challenge facing the retail sector, structural changes have also transformed the dynamics of supplier-seller relationships from within. Factors include the growing number of competitors, online channels and increasing demand for differentiation, responsibility and added value.

What is changing

Price negotiations have become far more strategic than in previous years, says Ron van Veldhoven, CEO of Dutch animal care and pet services company Pet Service Holding.

“While pricing remains important, we increasingly focus on the total value a supplier brings. Reliable supply, product quality, innovation, inventory availability and marketing support have become just as important as the purchase price,” he tells GlobalPETS.

Pamela Nelimarkka, Chief Operating Officer (COO) at the retail company Musti Group, adds that cost transparency is the biggest shift. “Now negotiations start from a much more detailed breakdown of input costs – raw materials, freight, energy, packaging – and we expect suppliers to justify each line rather than bundle everything into a single percentage increase,” the COO tells GlobalPETS.

The range of available information has made discussions more analytical and, in some ways, more collaborative, says Nelimarkka, because both sides are working from the same data.

Alexander Amicucci, founder and CEO of Italian specialty retailer Zoopark, agrees about the level of analysis required to justify higher prices. “Generally speaking, we are very cautious when accepting price increases. Before agreeing to any increase, we expect it to be supported by clear and objective reasons, such as genuine increases in raw material, production or logistics costs,” Amicucci tells GlobalPETS.

A brand’s perspective

For manufacturer Oma’s Pride, pricing tends to follow e-commerce, but the company says it is open to negotiation when retailers provide feedback on prices.

Avoiding channel conflict is also important, as retailers want confidence that the brand’s e-commerce business will not undercut them through lower pricing or constant deep discounting.

“We want to give them enough flexibility to price appropriately. That conversation changes if we are developing a unique product for a retailer or entering a new segment where pricing may be more market-driven,” Oma’s Pride CEO and President Adam DeJulius explains.

Key negotiation points

Current discussions typically include delivery reliability, lead times, payment terms, exclusivity, digital content, stock availability and sustainability, Van Veldhoven says. “We also look at how suppliers can support online growth through high-quality product information and consumer marketing,” he adds.

Musti Group says it has become firmer on marketing cooperation, “requiring it whenever we launch a new brand or give a supplier wide distribution, since that level of commitment on our side needs matching investment from theirs”, Nelimarkka remarks.

As a sign of the times, there’s more emphasis on sustainability documentation during the evaluation process, the COO says, especially regarding packaging materials, sourcing certifications and emissions data.

Zoopark adds that, whenever possible, it also negotiates territorial exclusivity, dedicated commercial conditions and marketing or launch support for brands entering the retail network.

A report from consultancy firm McKinsey describes this movement as a transformation of supplier relationships “from trade negotiations to integrated commercial partnerships”. From a survey of 43 North American grocers, the firm found that 64% of them expect trade, retail media and business planning to be mostly integrated in the next two years – something which will factor into negotiations.

The role of innovation

Product innovation also matters, with genuinely differentiated products or exclusive ranges often giving suppliers more room in negotiations, Musti Group says.

The same holds true for Pet Service Holding. “Brands that continuously innovate and support their retail partners are much more likely to receive additional investment. Conversely, brands with declining demand, inconsistent supply or limited differentiation become candidates for rationalization,” Van Veldhoven says.

Deciding where to sell

Oma’s Pride says its negotiations are subject to different challenges and dynamics than those of other brands because it distributes only to neighborhood pet outlets. “The discussion is less about national scale and more about whether we are the right fit for a retailer’s customers and limited freezer space. That space has become more valuable,” DeJulius says.

From a manufacturer perspective, retail and distribution consolidation has made access more difficult for emerging brands, DeJulius points out. “Distributors want established demand, reliable velocity and a credible growth plan.”

Oma’s Pride seeks retail partners willing to build a strategy together. “We expect transparency, reliability and a partnership mindset. Successful suppliers understand our customers, invest in innovation and work together with us to create sustainable growth,” he adds.

The same applies to distribution partners. According to DeJulius, the best distributors provide data, identify the right accounts, offer market feedback and help improve velocity.

Fresh challenges

For Pet Holding Service, balancing margin expectations with rising operational costs throughout the supply chain continues to be one of the biggest barriers to overcome.

Challenges are not uniform, Musti’s COO states, saying that they can include payment terms, marketing contributions, volume discounts, exclusivity or distribution rights – usually depending on the partner.

“The common thread is that as relationships mature and distribution becomes more complex, more terms end up on the table at once rather than negotiations centering on a single point,” Nelimarkka adds.

Besides, supply chain and commerce have become more complex in general, subject to cost volatility, logistics networks, stricter sustainability and compliance expectations and omnichannel increasing demand. “It takes longer to reach agreement, but the outcomes tend to be more durable because more of the relationship is addressed upfront,” she concludes.

The influence of retailers

Germany’s Monopolies Commission, an independent advisory body that assesses competition and market concentration, highlighted the growing influence of retailers in commercial negotiations.

In a November 2025 report on competition in the food supply chain, it noted that four retail groups control around 85% of the country’s food retail market, strengthening their bargaining position with manufacturers.

It also found that average profit margins for retailers and manufacturers had risen over more than a decade, while consumer prices had increased more sharply than in many other EU countries.

Retailers are also consolidating their bargaining power across borders. Last year, Carrefour, France’s Coopérative U and Germany’s RTG International established Concordis, a European buying alliance representing more than €125 billion ($140.4B) in combined turnover.

Operational for the 2026 negotiation round, the alliance pools purchasing negotiations with major multinational branded-goods suppliers, aiming to improve commercial conditions and strengthen competitiveness.