May, 1999

Cover & Feature Stories

Crowning Achievement

Suppliers are known for their unhappiness with retailers. Scarcely a day passes in the produce industry without some supplier somewhere being quoted as criticizing retailers for their alleged failure to promote product well, to work cooperatively with suppliers and, perhaps especially, for their failure to lower prices when crop prices are down.

Yet the 1999 PRODUCE BUSINESS survey of suppliers to identify retailers that exercise excellence in merchandising, marketing and management also found suppliers generous with praise for retailers around the country. What are the traits of retailers that most win the praise of suppliers? We’ve changed the names to protect the innocent – and the guilty. Herewith, the royal roll call:

Accessibility: By far the single trait most frequently identified as characteristic of a great retailer is accessibility. Over and over again, suppliers and commodity promotion boards told stories of great retailers and how accessible they were to sharing ideas to improve produce sales.

Accessibility takes many forms. One shipper explained: “I met the vice president of produce at a grower-oriented trade show. Just the fact that he was there indicated he was willing to reach out to growers and learn about their concerns. I told him that I had been unable to find the right person to talk to for a new product and he asked for a business card and promised to get back to me. The next day, I had a message from a buyer on my voice mail asking to talk.”

Flexibility: Another frequently praised characteristic of a good retailer is flexibility, and according to our respondents’ comments, this characteristic is in shorter supply than accessibility. These comments were mostly directed at retailers who were willing to work with shippers to handle oversupply on certain sizes or products.

An East Coast broker clarifies the situation: “The problem with most retailers today is that they want what they want without regard to what Mother Nature is producing. What I like about this particular chain is that they have some flexibility. They’ve made special in-store displays to help me move sizes that are not their usual buy.”

Innovative: Over and over again, suppliers praise those retailers who were willing to go fight with the computer people and gain acceptance for an odd-size package or new product. “As an importer, I’m often presented with delicious beautiful product that simply isn’t imported to the U.S. in any volume. As a result, the package is often non-standard, and 95 percent of buyers just don’t want the hassle. They make excuses that it is not in the computer, etc.

“However, this particular chain has a ‘can do’ attitude. If it is good products at a good price, they want to offer it to customers. They make me feel like it is me and the buyer together fighting against the computer room to bring product to the stores, and to consumers.”

Aggressive Merchandising: Growers and wholesalers like to see things happening: Creative promotions directed at the consumer, including demos, ads, display contests. The suppliers seem to feel that retailers who do these things are being proactive partners in moving crops as opposed to simply passive customers.

One grower comments: “We just kill ourselves all year long to produce top quality product. When we see the price levels, it is discouraging. I like this chain, because when I go in there they always have something cooking. They obviously think of themselves as having a job besides displaying produce – that they have responsibilities to help build demand. I like that.”

Aggressive Pricing: No surprise here. Shippers like to see low retail prices. The consensus is that is moves product and shows that the retailer is interested in helping move the product.

As one grower puts it, “I think it is outrageous the way most chains profiteer. It is an insult to farmers and to consumers. If the consumer ever really comes to understand the lack of response to price declines on the part of retailers, they’ll have the Congress bring back price controls. This one chain, though, responds fairly quickly to market declines. That’s the most important thing, so they get my vote.”

Variety: Although one might have thought that suppliers are only concerned with the items they sell, it turns out that suppliers are disdainful of retailers that don’t carry a substantial variety of product.

A shipper details his view: “I really find that the main thing that makes a produce department successful is variety. Cleanliness and display are important, but those departments that hit you with all kinds of things you’ve never tried before are beautiful. It makes people want to spend time in the produce department and so I think it helps sell more of every item.”

Condition: Not surprisingly, suppliers are very sensitive to the condition of produce on the shelves. In distinguishing between retailers, suppliers point to the fact that one is constantly culling inferior product whereas another leaves it sitting on the shelves.

According to one wholesaler: “A lot of stores are just disgusting. I’ve gone into some of the biggest chains in the country and seen insects on stone fruit because some nectarines get pierced and nobody cleans things up. The chain I like seems to always have people going over the displays and keeping them in good condition. I think that is more important than anything if we want to sell.”

Employee Training: Few things get the gander up on a grower more than employees giving incomplete or incorrect information about the products. Retailers who train employees, particularly in product knowledge, get raves from suppliers.

“The typical store clerk just doesn’t know the differences between different varieties of the same product – an onion is an onion, an apple is an apple – and it is just not true,” vents a grower in the southeast. “We can’t sell all the great things this industry is producing if our salespeople don’t know anything about the items. I work with a very high volume independent who just seems to hire smarter people and then trains them better. I don’t know how he does it, but I think he cares more.”

Consumer Education: Suppliers really get a kick out of all those recipe brochures, nutritional information, cooking classes, etc. The more consumer education the more suppliers like it.

A supplier of fresh-cut product explains his view: “We have so many products in this category with new ones coming out every day. Consumers have to be educated as to how they can use these products and what kind of health benefits they have. Supermarkets have to do the educational function that doctors’ offices have abandoned in this age of managed care.”

Cooperative But Not Demanding: Retailers who have worked with suppliers and commodity promotion boards to set displays for test purposes – and those who have been willing to share sales data in response to ads, displays, promos, etc. – win high praise and are considered once again as partners in the search to boost produce sales. This is as opposed to those retailers who solicit money in the guise of cooperation.

One commodity promotion group member reports: “This particular retailer really works with us. When we’ve needed to run tests, this company has allowed the test displays we need. They are genuinely interested in finding ways to sell more produce. Just as important, this genuine kind of cooperation means they minimize the coercive forms of ‘cooperation’ in where some chains demand lots of money for nothing. This chain is really our partner; they don’t just use the phrase on invoices. That is a big difference.

Comments on the Comments:

By and large, supplier comments break down into two categories. On the one hand, suppliers like all the things all consumers like – variety, good quality, cleanliness, etc. No matter how retailers treat suppliers, they can’t be worthy of praise if they don’t deliver a good package for consumers.

Suppliers, though, have special concerns. These principally relate to the willingness of retailers to serve as active participants in the process of moving produce, especially the produce that the supplier happens to have.

In this, one wonders, if suppliers aren’t doomed to greater unhappiness in future years. The growth of things such as EDI and category management seems at heart as methods for avoiding the emotionalism incumbent in what suppliers seem to want.

Put another way, the supplier seems to want a retailer who will listen to his problem – say, a surplus of a given size or variety – and then do something to help. Whereas the hot topics from consultants and industry experts indicate that what should be sold should be determined analytically with as little influence from a personal relationship as is possible.

Of course the suppliers may know something the consultants don’t. In the end, any industry depends on a prosperous supply base, and the variable nature of a produce crop means that, inevitably, there is going to be product that is not the type a chain would have ordered.

In this sense, produce is simply different than dry goods. Whereas a factory can be set up so that virtually all product is to specification, a produce farmer can’t set the specs that tightly.

If the retailer sets the specs more tightly than the grower can, then one of two things has to happen. First, the product could be sold in other venues. But, increasingly these markets for odd sizes, varieties, and off quality have dried up. So, increasingly the supplier can’t count on another market to buy what the retailer doesn’t want. Second, of course, the product could be dumped. But that just increases the percentage of the crop costs that retailers have to cover on their core product.

So, if consolidation continues and chain retailers gain market share at the expense of other venues, those chains are going to have to make a decision: Either work with the growers to move what nature has given them or recognize that prices will rise to cover the production cost of product regularly dumped for not meeting supermarket spec.

To a grower, the second choice is decidedly second best. Therefore, he is looking for a friend.  pb