Buyers Guide, 2004

From the Editor

Eyes Wide Open

Among the major departments, the deli is the best opportunity for quality buying in supermarkets today. Grocery has become so completely driven by movement reports and slotting fees that it is beyond hope. Produce buys creatively, but is so driven by day-to-day availability and wild price fluctuations that it really can’t consistently fit predetermined positioning. And with case-ready meat sweeping the country, meat departments are increasingly homogeneous.

Through selection of product, the deli alone has the opportunity to both distinguish a store from its competitors and to consistently project an image — in other words to position the store.

Of course, just because the opportunity is there doesn’t mean that many chains won’t mess it up. Boar’s Head is probably the most interesting example of the temptation of easy procurement.

Boar’s Head has many fine products but, not surprisingly, every product in its line is not the top product in its category. If a store has a poor quality deli or even just lacks a reputation for fine deli, carrying Boar’s Head’s whole line and making the Boar’s Head name as prominent as possible probably is a big winner.

But for any chain that views itself as high-end, the decision to turn the whole line over to Boar’s Head and promote that fact poses real concerns: First it means the chain will probably reduce its purchases of other, possibly superior products. Second, instead of building up the chain’s own name and using the deli to buttress the chain’s reputation, the chain is going to rely on a supplier name that may not be as strong as that of the chain. Perhaps even more important, if the chain emphasizes a supplier brand, it loses the chance to enhance its own brand equity, which can be transferred to the overall shopping experience.

But good buying is hard because the standard isn’t just who shaved a penny a pound off the cheddar, or even which vendor offers the best quality food. The standard is who creates the department that is right for one’s consumers. This means that in procurement, one’s eyes must be wide open to many variables:

  • Food Safety — Nothing the deli department can do can help the store if some customers get sick or die. So no deli supplier can be a good one who doesn’t follow the most rigorous food safety precautions. But what does this mean? And where does one draw the line? After all, a plant can always be made safer. Any deli director worth his salt is now integrally involved in these issues.
  • Technology and Logistics — Part of being consumer-focused is being dedicated to driving costs out of the system so that the consumer can get the best value while the store can meet its own ROI hurdles. Increasingly the great supplier has to be ready to receive bills and send payments electronically, be hooked up for continuous replenishment and, increasingly even be willing to place product in a retailer’s warehouse to be actually sold via a Just In Time inventory approach exactly when the chain needs the product. These capabilities are a double-edged sword. Value them too lightly and your supplier base won’t be competitive, but enforce them too rigorously and you’ll exclude many of the lower volume, but high excitement products and product categories.
  • Information, Training and Staff and Consumer Education — It is simply impossible for any chain to be up on the latest in every product category. Good suppliers don’t just sell and run; they provide information on their products and categories, help keep your staff up to date and partner to make sure consumers understand the joys of great food and how to prepare and store and handle it safely.
  • Product — I put it last but it must really be first in the heart of the buyer. And this is a problem because supermarket buyers are not selected because they necessarily love food. Yet, in the end, no deli can handle everything, so the consumer relies on the store to make choices and find foods that will be fun, delicious, interesting and affordable. This means looking for innovative suppliers who come up with new products that keep the department changing and continuously intriguing. It also means that buyers need to be doing plenty of cuttings and samplings to find great products. Yet even this has become more complicated. With consumers an increasingly diverse group, we need buyers who both are willing to stick their necks out and say, “This product is great; I want in on the shelves” and, yet, we also need buyers who recognize that their personal tastes are probably not as broad as the diverse tastes of the consumer base. In other words just because you aren’t a big fan of Mexican cheeses doesn’t mean they won’t be loved by your customers.

Finally, we have to be careful to not allow the presence of money in the procurement decision matrix to corrupt our thinking. If a supplier writes a big check to secure space or an exclusive status, remember that the store is not getting something for nothing. That supplier is going to make back every penny of that payout through its margins on product sold to your chain. And the check poses the big risk of making your department lazy. After all, if you can just rent out your shelf space, it takes the priority away from offering appealing product that actually pleases customers, builds a reputation for your chain, and keeps customers coming back for more. That’s a temptation that procurement executives need to avoid at all costs.  DB