Wholesaler Choices

One Manhattan independent immediately destroys the weekly sale flyers dropped off by his primary wholesaler. He believes that the coupon prices would kill his profits. He has to pay for the flyers as part of the wholesaler's agreement, so the waste occurs 52 weeks a year. He wants the wholesaler because the prices he pays, assortment, and delivery are fine. It's not possible to run a profitable independent supermarket without at least one primary wholesaler, and many supermarkets need several supplemental wholesalers.

Mark Lilien, Consultant, Retail Technology Group

I'm finding that the happiest independents are those who are members of regional co-ops. It's not always about the cost of goods, but the service levels they provide. They like being stockholders of their wholesaler and being able to get to know the management on a personal level. Sure, there is a place for the multi-billion dollar wholesalers who dance to the tune of Wall Street, but since the demise of Fleming, many realize that big is not always better.

David Livingston, Principal, DJL Research

I agree wholeheartedly with David. Coop members are doing the best amongst independent supermarket operators, with a few notable exceptions. Wakefern, AWG, Unified Western and the various AGs around the country are going about their business supporting the retail owners in the face of any competition. They have to because there are no other customers to recruit – if the members can’t compete, the coop goes down. Voluntary wholesalers simply don’t have the mutual entrustment, as much as they say they do.

BTW, the common thread for those exceptions is a unique marketing focus (and usually several suppliers as a result). Stew Leonard’s is an example, as are Lund’s, Treasure Island and Andronico’s.

Ron Margulis, Managing Director, RAM Communications

Here a few (perhaps all too obvious) thoughts.

First of all, I believe that there are HUGE opportunities for independent retail store operators. These opportunities exist for those willing to offer products and services that are special, different and irresistible. Towards this, partnering with the right wholesaler is of vital importance.

Wholesalers benefit from serving effective retailer operators, and retail operators benefit from being supplied by an effective wholesaler. In so many ways, it is truly a symbiotic relationship where damage to one affects the other and where failure to support each other weakens the whole system.

In choosing a supplier, a retailer is faced with opting for a mostly pure logistics solution (most often picked by chains), or for a more full service approach that includes extensive marketing and merchandising programs as well as other ancillary business support services (most often picked by independents). To David's point, sometimes a coop is an effective option but, increasingly, that option is harder to find.

In the final analysis, it comes down to cost of goods, quality of services and programs, and attitude. It also comes down to understanding that the practices of one party directly impact the effectiveness and efficiency of the other. It comes down to working together, it comes down to flexibility, and it comes down to trust.

'TZatina'

I agree with the comments regarding co-ops. Years ago, I oversaw SV, Fleming, Certified Grocers, United, Associated... you get the picture. Anywho, it sure seemed to me that the independents not only were paying less in upcharges with the co-ops, but enjoyed the year-end kicks along with better support throughout the year.

Anonymous