Understanding Key Challenges in Building MT & GT Partner Loyalty

Partner loyalty refers to the commitment and trust a trade partner places in your company, consistently choosing to collaborate with you over competitors. In both Modern Trade (MT) and General Trade (GT), loyal partners become key stakeholders in your growth strategy.

They not only help expand your market reach but also act as advocates, recommending your products or services to others in the market.

Building and maintaining strong loyalty with these partners is critical for navigating competitive trade environments and ensuring sustained success.

Impact of Partner Loyalty on Business

Strong partner loyalty directly impacts a business’s stability and growth trajectory. In MT, loyalty fosters streamlined supply chain operations, smoother negotiations, and better product placements. For GT, partner loyalty enables you to penetrate diverse, fragmented markets more effectively and build stronger regional relationships.

A solid base of loyal partners minimizes the risk of turnover, reducing operational costs and giving you a competitive edge by reinforcing your brand presence.

Ultimately, loyalty from MT and GT partners secures long-term revenue streams and accelerates business growth.

Overview of Modern Trade vs. General Trade

1. Modern Trade (MT)

Modern Trade refers to large retail chains, supermarkets, hypermarkets, and other organized retail outlets that dominate the formal trade sector.

• These players focus on volume sales, standardized operations, and adherence to strict supply chain protocols.
• MT partners typically work within a highly structured environment, where processes are optimized for efficiency and consistency.

Relationship dynamics:

• The relationship with partners’ centers around volume, performance, and efficiency.
• Partners expect streamlined operations, consistent product availability, and reliable logistics.
• Loyalty in this space often depends on a partner’s ability to meet high expectations for operational efficiency and predictability.
• The relationship dynamics here are driven by formal agreements, data, and performance metrics, requiring you to provide strong, measurable results to maintain partner loyalty.

2. General Trade (GT)

General Trade is made up of independent retail stores, local shops, and traditional outlets, which form the backbone of many emerging and rural markets.

• GT partners are typically smaller in scale, more fragmented, and operate in a highly localized context.
• They focus on serving specific communities, often adjusting product offerings and services based on regional preferences and customer needs.

Relationship dynamics:

• The GT sector relies heavily on personal relationships, trust, and localized market knowledge.
• GT partners value flexibility and personalized service, expecting more direct and responsive support.
• The dynamics here are far less formal than in MT, with a greater emphasis on cultivating strong, individualized connections to address the unique needs of each partner.

Loyalty Factors that Shapes the MT & GT Partners Loyalty

MT partner loyalty hinges on several key factors.

• Performance metrics play a significant role; partners in this sector are highly data-driven, with decisions based on sales volume, profit margins, and operational efficiency.
• Exclusive agreements, such as preferred supplier status or dedicated shelf space, also help secure loyalty.
• Additionally, offering tailored solutions that improve partners’ operational efficiency or boost their competitive edge can strengthen your standing within MT relationships.

And for the GT partners, these come to play.

• Loyalty in GT is rooted in personal engagement, mutual trust, and localized support.
• Building loyalty with GT partners requires a hands-on approach; frequent visits, responsive customer service, and a deep understanding of local market dynamics are essential.
• Flexibility in terms of payment terms, promotional support, and product offerings also enhances loyalty in this space.

Common Challenges in Building Loyalty in Modern Trade (MT)

1. Price Sensitivity

Modern trade retailers often prioritize price over brand loyalty. With tight margins and pressure to keep prices low, MT partners focus on sourcing the most competitively priced products.

This reduces their willingness to commit to long-term relationships based solely on brand value, making it difficult for suppliers to foster loyalty without offering continuous price advantages and incentives.

2. High Competition

The modern trade environment is saturated with competing brands, many offering similar products with little differentiation.

This high level of competition makes it harder to stand out and build lasting loyalty. Retailers have numerous options and can easily switch suppliers if a competitor offers better terms, making it essential to develop unique value propositions beyond price.

3. Limited Shelf Space

In modern trade, shelf space is limited and highly competitive. Retailers often give preference to products with higher margins or proven sales performance, reducing the visibility of other products.

As a result, even strong brands can struggle to maintain consistent shelf presence, which negatively impacts their ability to build brand loyalty with MT partners.

4. Frequent Switching

Retailers in modern trade frequently switch suppliers to maximize short-term profitability, often basing decisions on immediate cost savings rather than long-term relationships.

This frequent switching weakens the loyalty cycle, as retailers may not see the benefit of maintaining stable partnerships if there’s no tangible financial advantage.

5. Inconsistent Pricing Strategies

Misaligned pricing strategies across different channels or regions can frustrate trade partners. For example, if a retailer finds that your products are being sold at a lower price in another market, it may cause dissatisfaction, resulting in strained relationships and reduced loyalty.

In modern trade, the profit margins are typically thin, and retailers may not be motivated by traditional incentives.

Suppliers need to craft loyalty programs that offer tangible benefits beyond margin improvement, such as enhanced operational efficiency, marketing support, or exclusive product offerings.

7. Short-term Focus

Retailers often prioritize immediate gains, such as promotions or short-term profitability, over long-term brand loyalty.

This short-sighted approach makes it harder to build deep, lasting relationships with MT partners who may not see the value in maintaining consistent, loyal partnerships unless they deliver immediate results.

8. Complex Supply Chains

Modern trade operates within a complex supply chain environment, where logistical challenges can disrupt the consistent delivery of goods.

Supply chain disruptions, such as delayed shipments or inventory shortages, can strain relationships and erode trust, making it difficult to maintain loyalty.

Common Challenges in Building Loyalty in General Trade (GT)

1. Fragmented Market

Indonesia’s general trade sector is highly fragmented, with a vast number of small, independent retailers spread across urban and rural areas.

This makes it difficult for manufacturers to implement consistent communication and loyalty strategies. The diversity of market needs across regions adds another layer of complexity, requiring localized approaches to build meaningful loyalty.

2. Price Sensitivity

Small retailers in Indonesia’s general trade landscape operate on thin margins, making price a primary factor in their purchasing decisions.

Unlike larger modern trade partners, these retailers often prioritize low-cost goods over brand loyalty. Manufacturers need to balance competitive pricing with building long-term relationships, which can be challenging when price wars dominate the market.

3. Low Brand Awareness

In Indonesia’s GT market, retailers typically focus on fast-moving consumer goods (FMCG) that sell quickly rather than investing in specific brand promotions.

This low brand awareness makes it difficult for manufacturers to build strong loyalty, as retailers may not see the benefit of committing to one brand over another, especially when price or product availability takes priority.

4. Frequent Stockouts

Inconsistent product availability is a major issue in rural and remote areas of Indonesia, where supply chains are less reliable.

Frequent stockouts damage trust and loyalty among GT retailers, who may switch to more consistently available products, even if those products offer lower margins or less brand recognition.

5. High Competition

In Indonesia’s GT sector, competition is fierce. Retailers frequently switch brands based on short-term promotions or price offers from different suppliers.

Building loyalty becomes difficult when retailers are primarily motivated by immediate savings, and brands struggle to differentiate themselves in a crowded, price-sensitive market.

6. Manual Inventory Tracking

Many general trade retailers still rely on manual inventory management systems, which leads to inefficiencies in stock control and purchasing.

This outdated approach can cause frequent stockouts and miscommunications about product availability, hindering efforts to build consistent loyalty.

7. Rural Supply Chain Challenges

In Indonesia’s rural areas, poor infrastructure and challenging transportation networks make consistent product availability difficult.

This disrupts the ability to maintain strong, reliable relationships with GT retailers, especially when alternative suppliers with better distribution networks can fill the gap. Addressing logistical challenges is essential for fostering loyalty in these regions.

8. Low Margin Products

Many GT retailers focus on high-turnover products with slim margins, making it harder for manufacturers to differentiate their brands in the market.

To build loyalty, brands need to offer more than just competitive pricing; they must provide added value through reliable service, strong margins, or marketing support that aligns with retailers’ business goals.

Wrap up!

Building and maintaining partner loyalty in both Modern Trade (MT) and General Trade (GT) environments comes with unique challenges. Each sector demands customized strategies to effectively overcome these obstacles and foster long-lasting relationships.

By addressing these challenges with targeted strategies and leveraging data-driven insights, principals/manufacturers can build stronger, more resilient partnerships in both Modern Trade and General Trade environments.

If you're looking for a trusted loyalty platform that understands the complexities of rewarding and incentivizing MT and GT partners, Tada can help. With extensive of experience in fostering stronger partnerships, we’ve worked alongside leading brands from various industries to build meaningful connections through personalized reward & incentive strategies.

Request our demo now to see how we can support your business in achieving the same.