The Negotiation Dilemma

Avoid an Emotional Reaction

In Autumn 2021 I received a call from a client who was faced with demands and threats from Sainsbury’s.

Sainsbury’s had sent out very strongly worded messages threatening suppliers that they needed to hand over money or face consequences and that it was all designed to drive performance after the pandemic settled.

The client was worried, fearful and confused. They could not talk to Sainsbury’s because they refused to answer the phone. The silence added to the pressure and risk.

Three months later at the start of 2022 Sainsburys announce their performance report and indicate an increase in profits despite lower sales in the 13 weeks up to Christmas.

What does this say to all the suppliers who are faced with increased production cost, supply costs and then these demands from Sainsbury’s to hand over money to support Sainsbury’s?

Have they paid straight into the profit line?

The Dilemma

The negotiator’s dilemma is fuelled by the need to continue doing business together, a dependency. Sainsbury’s are a large enough retailer that it is likely that many suppliers will always have to use them as a channel.

That means that there is going to be a deal this year, next year and the one after. The dilemma is, do I demand more next time because I feel aggrieved by how Sainsbury’s behaved, or do I simply move on and assess the next deal on its merits.

Negotiators can be a competitive bunch, often looking at a deal as win or lose. The results from Sainsburys could suggest a loss and that feels bad.

Like any setback, how you respond matters.

Foxleigh Insight

Negotiations do not have to be win or lose, but it is very hard to separate feelings when faced with this kind of situation.

The teams that succeed in upcoming negotiations will do so because they get control of the frame of discussion through communication that starts now.

It is essential to retain a cool head but to be clear about expectations for future performance and define some consequences. These don’t need to be threats, but at least having some method of taking action to protect interests provides confidence to negotiators who feel that they may have been exploited before.