elationships are key in this industry. And that doesn’t stop when growers/shippers/processors hand over product at the end of the supply chain and the retailer takes the ball. It is to the benefit of each side of this relationship to invest more in the time, patience, and understanding it takes to build a partnership and allow the expertise each party brings to the table to help fill in the blanks. This is a two-way street, and both sides need to invest in the future together. In part one of this two-part series, we discussed the healthy tension that resides, in any negotiation; how contracts or “commit to grow agreements” for key categories allow both sides to work collaboratively; and how, as consolidation continues, both buy-side and supply-side companies should have both a long-term strategy, along with short-term buy-sell tactics. In this section, we take it a step further and work on cultivating and understanding the buy-sell relationship in a different, but beneficial, way.
1
While short-term, buy-sell tactics are necessary, find ways to move more towards a collaborative partnership
Yes, I know, easier said than done. A program based on a partnership can offer more benefits and advantages than not these days. Collaborative partners can achieve differentiation this way—but only by working in cooperation. Sometimes, it even takes the retailer being open to the fact that the supply-side may be able to help them solve some of their problems when addressing the needs of the Ultimate Customer. I use the term “Ultimate Customer” to refer to the person who buys at retail or orders at foodservice. This distinguishes between the Ultimate Customer and the supplier’s retail customer. Every step in the supply chain of fresh produce needs to have a laser focus on the Ultimate Customer as that will drive all the decisions that retailers make. If they can help the retailer make better decisions, they are one step closer to being the proverbial Collaborative Partner.
But, it also means that both sides need to be more transparent and honest with each other. Looking at the negotiation as “I have to win” versus “we both can win” is not conducive to solving the real problem, which is: what are the needs of the dynamic Ultimate Customer and how do we solve them? So, let’s touch on a couple areas where collaboration is key and where it works.
Exclusivity
Let’s talk about proprietary varieties or club varieties as a model. There are several companies that have done fantastic work in developing better-tasting products. You’re familiar with Driscoll’s, who has been a leader in not only proprietary varieties but also has nurtured exclusive relationships as well. If you want that berry in your store, whether you are Kroger, Wegmans, or Gelson’s, you are going to need to build a partnership with them. But, let’s take this out of the produce world and look at the supermarket in general. Take the Boar’s Head model. Boar’s Head is a premium deli-style lunch meat company. Anyone at retail knows that at this level of exclusivity, if you want Boar’s Head meat in your deli, there are virtually no negotiations. Retailers pay the company’s price, will train grocery staff the way that Boar’s Head wants them trained, and the retailer is going to do it exactly how the company wants it–or Boar’s Head will pull the plug. The company is protecting its consumer brand. This same model and partnerships are virtually the same with Starbucks and other consumer brands that retailers feel they must have to satisfy the wants and needs of their Ultimate Customers. But, you must relinquish a bit of power in order to reach this level of exclusivity. You have to create mutual value. As a retailer you can help them better understand the Ultimate Customer and as a supplier, they can better help the retailer with a multitude of things.
Remember, you are only one side of the equation
The retailer is not always the smartest person in a meeting. And vice versa! There are things that the supply-side can bring to the table that have nothing to do with the price of a box of anything. That might be category management, it might be market studies, or consumer insights…there are many areas that a supplier can identify that increase or decrease the bottom line. Today, many retailers have an infinite amount of customer data from their loyalty cards. Do you share any of this to help your suppliers help you? Or is this just another income stream?
2
Let’s talk about something called “label clutter”
This might be my own personal bias, but it used to drive me crazy to walk into a store and see multiple labels on the same commodity. From the customer point of view, this is label clutter and sends a message you might not want. No matter who your collaborative supplier is, there will always be a time when you might have more than one label due to growing conditions, etc. But do you really want four to five labels in your berry case or grape display just because you are bidding out your needs? What message do you send to the Ultimate Customer?
3
Every Retailer knows that to win with the ultimate customer today, they have to “own” fresh and that means that you must also own the “speed of fresh”
To own the speed of fresh, you need to have a supply-chain that supports you, and grower/shipper/marketers that support you. And that comes from building better buyer-supplier relationships. Many retailers today do not have a full understanding about the planting and harvest cycles, cooling times, or “cut to cool and ship” cycles of their key partners. It is not their specialty. If both sides open up and begin to create a dialogue about what is needed to give the Ultimate Customer fresh product (branded or not) and listen to each other, this collaboration will help you own fresh. Take it from someone who was a produce buyer and worked with buyers for most of his career, the key to creating better buy-side and supply-side relationships is to listen and collaborate, to promote growth and not stasis.
Reggie Griffin has over 40 years of experience in the retail grocery business, both in Merchandising and Operations with the last 10 years as the Corporate Vice President of Produce & Floral Merchandising and Procurement at Kroger. Kroger’s team was responsible for both produce and floral sales for one of the largest traditional supermarket chains in the U.S., with a floral operation that is still one of the largest in the world.
Reggie has been active in the produce industry, serving as the 2011-2012 Chairman of the United Fresh Produce Association (UFPA), past Board Member of Produce Marketing Association (PMA), and past Chairman of Produce for Better Health Foundation in addition to serving on several industry-advisory panels. He now owns Reggie Griffin Strategies LLC, a business committed to “Growing the Ultimate Customer” and working with clients both nationally and internationally. Reggie’s dedication and passion is to drive positive growth for his clients, coupled with long-term marketing insights.
