November, 2002

Fruits of Thought

True Partnerships

The premise of partnerships is that the partners, everywhere and always, have something to contribute, whether it is the same thing – as when all the partners kick in money – or it may be something different as when one partner has expertise in production and another in sales.

The premise when we describe the partnership between a shipper and a retailer is that both parties have something to bring to the table. Obviously this is true – the shipper has product and the retailer has consumers. But we use the term in the industry to represent something less banal – to imply, instead, a cooperation between the two organizations, to imply a relationship that goes beyond buying and selling.

Most efforts at partnership are scams; retailers who wouldn’t share so much as a line of scan data promiscuously using the world partnership to get money. This is what shippers complain about when they receive letters out of the blue informing them that they are now part of some partnership program and so must: pay some set amount per box, or buy a table at a dinner or a booth at a buyer’s private trade show. Many shippers could live without partners like this.

Of course, shippers also often use the word partnership in a one-sided way. They will announce that as part of their partnership efforts, retailers will receive X, Y and Z, perhaps point-of-purchase material, a booklet on nutrition and a Spanish language flyer, regardless of whether the retailer has any need or use for these particular items.

Anyone who has ever actually had a real partner knows that partnership is hard, that it requires trust, a sharing of information and a willingness to customize. The obvious problem is the transactional mentality that still rules in produce. As long as the goal is to buy the cheapest item available in the required quality set and to sell for the highest price possible, true partnership is impossible.

True partnership depends fundamentally on the retailer having an attitude that says that, long term, the retailer cannot prosper unless its suppliers prosper. In other words, that negotiating one’s suppliers into insolvency is not a solution.

Retailers have competitors and, of course, they can’t overpay just to be nice or consumers would drive the retailers out. But retailers can treat the problem of low grower returns as the retailer’s problem too.

It is interesting that Wal-Mart, the low-price leader at retail, has come closest to this ideal among major chains. You can often find Wal-Mart personnel at grower association meetings and similar functions. And the company is well known for sharing more information with suppliers than any other major chain.

When the history of the produce industry is written, the enormous good fortune that the produce trade had in that the founding generation of Wal-Mart’s produce leadership had a supplier development perspective can scarcely be overstated.

But partnership has to be built on more than one partner’s good will or even prescience. In seminars and articles, the experts always posit it this way: The shippers – as experts in their own product – contribute that expertise to the partnership. The dirty little secret about today’s shipping community, however, is the widespread ignorance about their own products and how to sell them at retail.

There are many exceptions, of course, and, indeed, many of the largest shippers have enormous expertise with whole departments devoted to technical issues, merchandising, marketing and more. But the trend is not good. For generations the people working in produce were farmers themselves. They grew up on farms, raised the same crop for a lifetime. They may not have known much about retail, but they knew their item.

Today, though, things have changed. The industry has become more professional, and the salesperson on the phone was as likely chosen because he got a degree from a good school as because he knows anything about a produce item. And, of course, shippers have changed too.

At one point a shipper sold a limited range of items usually right from a packing shed where the salesperson was working. Now the same shipper may sell dozens of items shipping from remote locations. Our salesperson now could be sitting in an office as distant from the product he is selling as the buyer is.

Finally, few of the people at shipping operations have any retail experience, and if they were invited in and given carte blanche to remake the store to sell more, many would have literally no idea how to proceed. If asked what consumers prefer in the display of their product, most shippers haven’t the foggiest idea.

So if partnerships are to work, most retailers need a change in attitude. Maybe Directors of Procurement need to be renamed Directors of Supplier Development. But even assuming the best of attitudes on the part of retailers, the development of true partnership systems will depend on shippers acquiring a different class of expertise, of being able to contribute more in terms of knowledge of what works at retail and knowledge of consumer attitudes.

Focusing on partnerships, it is easy to think the hang up will be technical issues – getting one computer to talk to another, etc. – but these issues, troubling as they may be, will be overcome.

The bigger issue is ideas. It has been written that there is no force more powerful than an idea whose time has come. There is also nothing harder than identifying such an idea. Shippers need to accept this change of orientation and invest in being the leading expert on their product line.  pb