WHOLESALERS, INDEPENDENTS URGED TO FORM PARTNERSHIPS

GREG GATTUSO

ORLANDO, Fla. -- Wholesalers and independent retailers must synchronize their business objectives to increase sales and profits amid heightened competition from self-supplied chains and other food-retailing formats, according to a panel of speakers last week at the Food Distributors International annual convention here.

Discussing the new demands of the wholesaler/retailer relationship, the panelists called for greater cooperation to expand cost-effective distribution strategies, such as cross docking, while eliminating wasteful and counterproductive efforts and building trust across the independent supply chain.

Doug Carolan, chief operating officer at Associated Wholesale Grocers, Kansas City, Kan., said better communications can protect business relationships from the erosion of trust that occurs over factors such as fluctuating prices.

"Acquisition cost is dynamic," he explained. "It flows. Prices can change day by day, especially on perishables."

He called on independent retailers to be more understanding, but he also called on wholesalers to stand up to vendors on behalf of their customers.

"The wholesaler's job is to find new products and challenge their suppliers when other prices in the marketplace are not equitable," he said. "You have to ask yourself if your suppliers are building trust between the wholesaler and the retailer -- or are they breaking down that trust?"

Ken Ferrera, president of James Ferrera & Sons, a Canton, Mass.-based wholesaler, said management of promotional dollars is becoming an increasingly difficult challenge.

"Retailers are not embracing Efficient Consumer Response or category management," he said.

"We need a passionate commitment to get the job done."

Ferrera said the failure of many retailers to implement ECR at the shelf level has had a negative effect on grocery sales.

"The center store must be invigorated," he said. "The center store is 60% of the store, and nobody's in there. We've got to get the shoppers back in the center store.

"Every dollar spent outside the store by the shopper is a dollar lost. The center store is where the bulk of those dollars are lost."

Jeff Noddle, executive vice president of Supervalu and president and chief operating officer of its wholesale food companies, said the food industry must focus on efficiency to be profitable in the current low-inflation climate.

"Inflation used to cover up a lot of problems, but those days are over," he said.

By controlling operating expenses, Noddle said, wholesalers can help retailers offer low prices, which drive volume, "but we can't do it alone.

"If you give the consumer the right economic incentive, the rest will follow," he said. "How do you reach people today? You do it through loyalty marketing programs."

He said supermarkets should borrow the "my McDonald's" concept from the fast-food chain "so that customers can look at your store and say 'that's my store.'

"The notion of 'that's my store' is critical. Consumers don't have time to shop around. They need to be fulfilled. We need to give them the impression that their store understands them."

Kenneth Macey, president of Macey's Food & Drug, Sandy, Utah, said retailers also need support in such areas as lending, succession planning, technology and communications sytems.

"I think it is vital that the wholesaler look at the retailer and think about supporting him [financially]," Macey said. "A lot of times a wholesaler can give the nod to the financial institution and then I can get financing."