business news in context, analysis with attitude

Responding to last week's In Conversation piece with David Friedler, president and managing partner of Simpactful, about the current state of vendor fees and deductions, one MNB reader wrote:

Congratulations for having this conversation about vendor fees and deductions.  Over the years, I felt that you were ALWAYS siding with the trade because you never addressed this issue from the vendor viewpoint.

Maybe you should bring back your Friday Happy Hour just to discuss this with the vendor community.  Happy Hour might last for days if you had this as a topic.

As long as I don't have to supply all the alcohol.  Might get expensive.

And, from another reader:

Great topic today as my COO and I were discussing placement and charge backs yesterday at length.

Brief: I am the National sales guy that sells to retail accounts, many through UNFI and KeHE. I am also on a couple IWG groups for the SFA. I have been lucky to work on a few focus groups with new and existing manufacturers. My past 3 positions have been startups, and I love it!

What retailers and distributors are doing is extortion. Smaller and new manufacturers are unable to compete after the fees are calculated, we have seen many get put out of business from these deductions. And even we are looking at different channels. Manufacturers think they are ready for retail.

2% Shrink fee.  1.5% marketing fee.  Free fills, just taken and not approved.  E comm fees.  Anything ordered at store and then not wanted they credit back.  And then they have a set fee ($60) to bill you back for a $4 item.

I had a proposal come in from Shaw’s (your area) yesterday, $15,000 per SKU which is $112 per store or at my cost is almost 6 cases of product. And there is no guarantee that they will keep it on the shelf for a year. Do they want to make money on the buy or the sell!

I think you answered your own question.

Last week I took note of a Food & Wine piece about black limes, a product that, to be honest, I'd never heard of before.  I commented:

I bring this up because to me, it illustrates an area in which retailers can play a larger role.  I'll bet that there are a lot of people out there who never have heard of black limes, and might want to add them to their kitchen repertoire.  Educating people about their use is one way to sell more product, and create a differential advantage when compared to less ambitious retailers.

MNB reader Deanna Haney responded:

Yep.  Never heard of them.  And I love your take on the retailer increasing sales (and loyalty, by the way) by educating consumers.

It seems to me that this is an example of something Whole Foods did/does?  I’m not sure and I haven’t lived near a Whole Foods in several years; so haven’t been in one recently.

Thanks for your constant insight.

On Friday, MNB shared a new short documentary from Hope Depot entitled "Hope Builds," which details the impact of three major natural disasters - Hurricane Andrew in 1992, a tornado that tore through Joplin, Missouri in 2011, and a California wildfire in 2018 - on communities, and how the retailer enabled both disaster preparedness and recovery efforts.

I commented:

The point of the video, it seems to me, is that Home Depot wants to be seen not in terms of the nails and wood and tools it sells, but in how those things come together, in the hands of caring people, to serve communities in their time of dire need.

It is an approach that food retailers should note - the meat and the pasta and the veggies and all the other items they sell should not be seen in a vacuum, but rather as components in a larger effort for people to feed and nurture themselves and their families.  To see them in a vacuum ignores the bigger picture, and misses the nobility of what food retailers do every day.

One MNB reader wrote:

Thank you for sharing this video.  My family lost homes in the Camp Fire in Paradise in 2018, and I watched from a distance.  We sent lots of socks, toothbrushes, blankets, etc. but still felt like we couldn’t possibly help with a disaster of this scale.  It’s companies like Home Depot, who have implemented policies over the past couple of decades that make it possible for these communities to get back on their feet.  I’m shocked and amazed that Paradise is up and running as quickly as it is, but not shocked at the character of the people who can do amazing things with a little help.  Being bigger than what you sell can go a long way. 

Last week we turned an Eye-Opener segment over to MNB reader Paul Martinez, who wrote about a WinCo endcap devoted to merchandise sold by Claire's, better known as a mall retailer selling jewelry for girls.

I commented that I thought this was smart for WinCo, which suddenly may show some fresh appeal to a customer base that has not traditionally found it fun or productive to go to supermarkets.

Which prompted the following email:

My name is Julie Scorsatto and I have had the privilege of meeting you and hearing you speak at GMDC under the leadership of Patrick Spear.  

The article you posted this morning regarding Claire's and WinCo is near and dear to my heart and I appreciate the post!  I am the National Account Manager for WinCo at Claire's and the checklane project is something I helped launch last year.  Given WinCo's smaller store count and regionality, it's awesome to see them get mentioned in the press.

Hope to see you at upcoming events as the world opens up a little more everyday.

Last week we took note of a new survey suggesting that more than half of respondents said that in the past 12 months, they've actually walked out of stores where they intended to purchase items because the lines were too long.   Of those, the survey says, "84 percent said they have done so at least twice in the last year alone" and "80 percent of shoppers said since the pandemic they have had to stand in line more often when shopping in a retail store."  It is a phenomenon retailers are aware of - 92 percent of retailers admitted "that wait times at busy periods have had a negative impact on their companies’ revenues."

MNB reader Rich Heiland reacted:

I have walked out of our local Kohl's for this very reason. The last time I was in the store I got one or two things. The store has registers on both sides but only one side was open and that had two clerks. The line was probably 20-plus people deep and most had multiple items. I left. But before I did I overheard several conversations from people who had a good bit of merchandise and were fuming. One woman said "I wonder what they'd do if we all just dumped this stuff on the floor and walked out."

I am not faulting the clerks, who were doing the best they could. My old adage in business, during tough times, always was "you can't slash your way to success." 

By the way, went home and got what I needed on Amazon Prime. Tried to contribute to local jobs but there is a limit...

Responding to another story, MNB reader Mike Moon wrote:

I can get on board with a gathering area in the store for seniors (we used to call them delis), but I'm not sure an intentionally slow checkout lane would be successful in America.

We always told our cashiers to be friendly, smile, and say hello, but always asked them to keep the conversation brief. I have seen people stand in the back of the store and talk to their neighbor for an hour, but when they get to the checkout, they want out NOW. Getting in a lane that has a chatty cashier just (ticks) them off.

MNB fave Glen Terbeek chimed in:

In today’s world, the retailer needs to compete on values above and  beyond distribution values.  Social values, ie "Chat Checkout" are just one possibility,  Solutions, information, ideas are some other potential values, defined at the local market level, is how to compete for the shopping experience in the future.   Competing on price for standard items alone is just the cost of being in business in todays saturated marketplace.

One MNB reader double-doubled down on another story:

On In-N-Out's expansion eastward: As a Californian, I worry this will accelerate our out-migration trends. All those Californians who have refused to move East because they couldn't get a good fast food hamburger will have no reason to stay. Overreaction? I don't think so.  Look at how many Californians have moved to Texas just since In-N-Out starting opening up there. Not a coincidence.

Ok, maybe I'm being facetious. Maybe.

And finally, this email from MNB reader Dave Jones:

Well done securing Greg McNiff to discuss WAFC and education. He is a great leader and one of the most vocal advocates for the program and the education of the next multiple generations of talent. My previous company supported the program for 40+ years, a very worthwhile investment for any company in our Industry.