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:
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