Let's face it: Many changes have been wrought in the food-distribution industry on account of many factors, but chief among them is the spate of consolidations that has permeated all sectors of the industry.
Much has been written on these pages about how retailers, wholesalers and manufacturers have merged, but when it comes right down to it, it's sales agencies -- we used to call them food brokers -- that are most affected by mer-gers and attrition. After all, there are now just three national sales agencies, with a few local or regional agencies leavening the mix. Indeed, no other industry sector has concentrated to such a degree, and so quickly.
So it would stand to reason that services traditionally performed by sales agencies must have changed dramatically. In a news feature in this week's SN, we're taking a look at that very situation and what it means for all sectors of the industry. You'll find the feature referenced on Page 1. It starts on Page 12.
Maybe the key question that surrounds the sales-agency situation -- at least from retailers' point of view -- goes to store-level services performed by sales agencies. Retailers used to consider such work to be little less than their birthright. Retailers often were able to enjoy what amounted to free labor when it came time to do a reset, to set a new store, to mount a promotional event and so on.
"Retail implementation," or "retail coverage," are the more formal terms that describe such activities.
Many retailers now assert that the days of full-blown retail implementation are fading and that fewer in-store services are available from their sales-agency partners. Specifically, as you'll see in the news feature, some retailers assert that their agency partners claim they simply don't have the funds to provide much in-store coverage. Some retailers also assert that sales suffer, owing to out-of-stocks, lagging speed-to-shelf for new products and a lowered retail presentation.
Sales agents, meanwhile, assert their retail coverage hasn't been reduced so much as that it has changed and, perhaps, is no longer focused exclusively on the supermarket channel, but on any trade channel that sells relevant product. Also, manufacturers expect more efficient buying processes -- maybe to the extent of using one buying point at retailers' national headquarters, which would tend to attenuate local contact. And some sales agents simply deny that their retail implementation has flagged, suggesting that their service levels have remained much the same but that retailers have rising expectations that just can't be met.
One way controversies about retail implementation might be resolved is by development of fair-share formulas, under which agents clearly articulate to retailers what they can do on behalf of the vendors and what retailers must do for themselves. Among others, that suggestion has been made by Mark Baum of the Association of Sales & Marketing Cos. (Another sign of the times: ASMC, which used to be known as the National Food Brokers Association, is now an affiliate of the Grocery Manufacturers of America.)
Through it all, this much seems clear: Retailers increasingly will be obliged to find a way to execute their own work and to disengage from undue dependence on third-party labor. Who will pay for that? Lower prices to retailers should. Competitive conditions demand that much, and more.
