The Art of Sales Prevention: Grocery Supply Chain Style
By Mark Lilien, Consultant, Retail Technology Group
www.retailtechnologygroup.com
Sales prevention techniques, as we’ve previously discussed on RetailWire (see Perfecting
the Art of Sales Prevention), have been perfected by new car dealerships and their sales floor personnel.
Although, it’s hard to imagine a level of incompetence on the same level in the business-to-business arena, there are numerous accounts where suppliers have seemingly thrown common sense out the window and engaged in practices that seem designed to prevent sales for their business and those of the customers they serve.
The following is the tale of an independent grocer and its supply chain partners. The names of the companies and individuals have been withheld to protect the innocent and guilty.
Let’s keep out-of-touch
For grocers, especially store managers and independent owners such as the one whose experience is discussed within this article, the face of the manufacturer is often the DSD route person who delivers product to the store.
If there’s a problem, it would be great to be able to contact the responsible person on the manufacturer side using the phone. Several major companies, however, complicate the matter by, for example, not printing their addresses or phone numbers on bills presented to the retailer. Drivers usually don’t get business cards either so, if there’s a problem, the customer often has to start an independent search to try and put things right.
For example, in the past couple of months, our intrepid independent grocer began a search looking for the local zone manager of several major manufacturers in the carbonated beverage, ice cream, salty snacks and packaged bakery categories because the contact information was not readily available. Although the right person was eventually reached at nine separate suppliers, the grocer couldn’t help but wonder why it couldn’t have been handled in an easier and less time-consuming manner.
Delayed response mechanisms
Over a month ago, the independent grocer hero of this story contacted three major manufacturers to ask for display racks since his wholesaler would not supply him with any. In each case, the grocer used the manufacturers’ Web sites to send e-mails and followed that up with calls to the toll-free consumer number on product packages.
All of the companies responded in identical fashion. The grocer was given contact information for at least three different people within each organization. When they were reached, they each told the grocer that they were not the right person to speak to. After repeated follow-up calls and e-mails, the ever-persistent grocer eventually found someone who said they could help. Problem solved, right? One month later and our independent grocer still anxiously awaits the day when the display racks will show up at his store.
Moderator’s Comment: Is the experience of the independent grocer in this article, common in the industry? What are the most effective independent grocers
doing to make sure they get the support they need from grocery wholesalers and other suppliers to drive business?
– Mark Lilien – Moderator
I always had my receiver to keep the contact data up to date. We kept a printed directory and occasionally I would verify the info myself.
Second, the old saying about the willing horse gets the oats applies to suppliers and retailers. If the supplier (DSD) asks for ad inclusion, off-shelf displays, special displays and the like, and you never have time to do it, hell will freeze over several times before you get anything extra out of them. And, why should you?
It’s Retail-101: build a good relationship with the people that are helping you grow. You want to sell more and so do they. You don’t have to invite them to your daughter’s wedding, but you have to treat them with some respect and be willing to give them a few minutes to tell you what they want you to do.
While I agree that this experience is very common among smaller businesses (like a couple of mine), I must also agree with sales_pro that many suppliers simply want to avoid saying “No.” Often, there is no WIIFM (What’s In It For Me?) in the equation for them, and they’d rather spend their limited time more efficiently with larger customers. That’s where commissions are maximized, not in finding a display rack for a two-store operator.
Southern Wine & Spirits, the largest distributor of wine and spirits in NorCal (and probably farther), is caught on the horns of this dilemma. While the service they provide to larger wineries in terms of acquiring distribution with major retailers, restaurants, and bars is superb, some of the smaller wineries they represent may feel underserved. The intangible here is that any one of these smaller wineries could produce next year’s favorite “butter-bomb” Chardonnay and distribution efforts must start from scratch in order to get it onto shelves. So, Southern must walk that tightrope and remain in contact with all their wineries. They have no place to hide.
Small, independent grocers have choices: 1.) They can decide that they like the size of their operation and learn to deal with its good (less stress) and its bad (less supplier attention); 2.) They can go to Sam’s or Costco, buy the stuff they can’t get, split up the bulk packages, and sell the individual units at a profit; 3.) They can decide to get into the volume game, pick one product at a time, and blow it out the door at little or no profit to get the supplier’s attention; or, 4.) They can surreptitiously team-buy larger quantities with non-competing stores and transfer product between them in pickup trucks at night (this happens a lot).
My beef with major DSD suppliers is their chain oriented communication channels. As an independent retailer, I need information on my desk, not lost somewhere on my voluntary wholesaler’s category manager’s desk. Contact info would be nice but what I really need is timely cost and deal information. Going to the invoice should be a check on promises, not the only way to know what pop or cookies are costing this week.
Sales Prevention in the Pet Channel
How about the manufacturer that takes a product — a pricey dog treat — that was available exclusively through pet specialty, raises the prices 15% over three years, makes it available to mass, and then changes distribution channels so it’s only available through one distributor who then raises the price of this already pricey treat by 10%. And has the audacity to call the new pricing “everyday low pricing.” Please don’t make me gag. Be honest about your monopoly — but don’t tell me the prices are “everyday low.”
Unfortunately, the dogs really like this product. I’ve been unable to find a substitute treat to switch my customers to!
Another example of sales prevention by manufacturers is a high-end dog food that decided to give an exclusive territory (in which my store is located) to a distributor with whom I was not doing business (for good and sufficient reasons). If I want to continue to carry this food, which my customers are requesting, I may ONLY order it from the new distributor. I am not allowed to order it from the distributor who services my account for other products and calls every week. The new guy doesn’t call for an order, doesn’t keep sufficient stock on hand to meet my needs. And, their driver shows up stoned when I do get deliveries. They had a 15% price increase last year. They effectively prevented a whole bunch of sales — and I am switching customers to different foods that are more easily available from more reliable sources.
Unfortunately, communication is often discouraged for a very good reason. Telling a retailer “NO” always costs you business! Every business must operate on a P&L basis. Some accounts produce better returns than others. Resources have to be targeted to accounts that offer the best chance of producing a return on those resources. While this may not seem fair to an independent retailer, it is reality. The very best way to receive attention from a DSD supplier is to ask him for ideas on how you might improve his business in your store. If the supplier feels that you are working in his best interest, your chances of receiving “an investment” from him go up immediately. If, on the other hand, you simply want racks for your store so you can relocate his product from current shelf space to the rack, then I defy you to give me one reason why this supplier should accommodate your selfish wishes. I have been there and step number two is to threaten to take shelf space away if the desired rack isn’t provided. Good luck doing business that way! In all likelihood, that will result in your very nearest competitor getting much better service from the supplier in response to your threat.
Now you know why it’s hard to find a decision maker when you need one. It’s because many retailers only look at their business from their point of view. When you do business this way, you get mad when anyone tells you NO and that hurts the supplier’s business. I can’t tell you NO if you can’t find me!
Boy, have you ever opened a can of worms here. My wobbly is about online sales. Has no one ever pointed out to American retailers that the internet is called the WORLDWIDE web for a good reason? They seem to have much difficulty understanding that people outside the US may want to place orders for delivery within the US. Websites frequently do not accept ex-US billing addresses, telephone numbers or, in some cases, ex-US credit cards even if the item being purchased is being delivered to an American address.
Worst of all is trying to place an order for delivery to Alaska. I do actually understand that this state is not located in the Continental US but if there are restrictions on what can be purchased, the information should be easily accessible. Not necessarily obvious because the majority of customers won’t care but for those of us who do, there could be a single sentence or paragraph in the Delivery area to say go away, don’t bother us or choose from this limited selection only or… I have spent today trying to buy a plant for my daughter in Anchorage and have had incredible problems even with Anchorage based florists. Flowers are apparently fine but plants are not. While I am sure there are good reasons for this (Dept of Agriculture SAYS SO), it would help if the websites also said so. Talk about deserving an A++ for sales prevention.
Oh, boy. I have to go on a tear on this one. Our intrepid little magazine publishes an annual directory of manufacturers in the frozen and refrigerated foods business. We aim for accuracy, and spend enormous amounts of time on the Web and on the phone. It absolutely amazes me how many companies move each year, or phones change, etc., necessitating an update. But very often, Web sites do not list any contact information whatsoever. There’s a form on the site for you to fill out, and they promise to get back to you. On the rare occasion I actually used the form, nobody ever got back to me, or I got an illiterate response that didn’t even come close to addressing the question. One major manufacturer had no way to reach them, and I finally found their address on their 10-K, under the “investor relations” part of the site. Sometimes, when I got a phone number, I wound up playing the, “If you want to hear a duck quack, press 5 now” game. And ultimately, after six transfers on this electronic phone tree, I’d get a recording asking me to leave my name and number because my call was “important.” Google and the Yellow Pages became strong allies in tracking down basic information about companies, but sometimes their info is out of date. Most annoying of all, some Web sites start off with these wild electronic dog and pony shows, the equivalent of the Web page designer’s orgasm, that you can’t shut off. And then, after two minutes of watching eagles screech and soar and planets rotate in the heavens, you get to a site that doesn’t tell you how to reach the company, or even full information about what their product line is. So, yes, with annual extensive experience trying to update and verify basic data on vendors, I would say this independent retailer’s problem is not unusual.