Service Wholesalers And Independent Stores
Jim Prevor’s Perishable Pundit, July 31, 2007
The Pundit spends a fairly substantial portion of his life giving speeches and talks. Keynote addresses before large audiences, broker meetings, board presentations, strategic retreats, chain retail meetings, commodity specific meetings, universities — all in a day’s work.
One group that often calls and often impresses the Pundit is produce-specific service wholesalers. Often, though not always, these service wholesalers grow out of old terminal market wholesalers that adapted because chain retailers started buying direct.
We have, in the past given talks for many of these types of companies, having spoken before such organizations as the Crosset Company, Caito Foods Service and RLB Food Distributors.
Last week, the Pundit had the opportunity to give an after-dinner speech to a group of retailers hosted by Indianapolis Fruit. The Mascari and Corsaro families treated us with extreme hospitality. We had the opportunity to chat with many of the independent retailers, have dinner with some of the company’s leadership team, including Mike Mascari and Shane Towne, who more than competently arranged our trip. We also had a chance to piggyback on a tour of the headquarters facility of Indianapolis Fruit.
When we speak to these types of groups, we often find ourselves left not knowing if we should laugh or cry.
Admittedly, the type of company that asks the Pundit to speak tends to be self-selecting for being progressive and engaged. However, we find many of these service wholesalers are far more progressive than the vast bulk of retailers they service.
Let us use Indianapolis Fruit as an example: To walk with his customers through the company facility with Dan Corsaro, Vice President, leading a tour, you feel as if the industry should give the guy an award. The whole company is so focused on helping its retailers sell more produce. Demos — they’ll back ‘em; training — they’ll provide it; a store needs signage in another language — they’ll find a translator and make it happen.
The tour was nominally about demonstrating the wholesaler’s capability to the retail customers, and that was plentiful — Indianapolis Fruit has its own certified kosher fresh-cut facility, a private-label program, a split-case program for specialties, an organic program that indexes higher than any large conventional chain, and a foodservice sister company — Piazza Produce, Inc. — to provide extra high-end, ethnic and specialty product.
Most of the tour, though, was about Dan pleading with the retailers to take advantage of some small fraction of what Indy Fruit had to offer.
And some do. Maybe 20% of the retailers get it — they lap up what their supplier-partner has to offer and they come to these meetings to learn all they can. After 15 tough years as Wal-Mart rolled across America, these independents are opening new stores, doing expansions and remodels.
But far too many of these retailers are failing to respond — which means that not just their direct supplier but the whole industry is not selling what it could. Among the issues:
1) Technological Hesitation
What do you say when a Produce Manager explains he can’t place his order online because his boss won’t give him Internet access since he might use it to waste time or look at porn? We understand the issues — but think of the hours wasted on both sides doing telephone orders and the decrease in accuracy caused by mistakes due to verbal contact.
2) Clarity and Honesty on Concept
So many independents will talk the game — “We want to be the anti-Wal-Mart and have high service, broad assortment, emphasize organics, high flavor, etc.” — but, in reality, some of these retailers always buy the cheapest product. This makes running a distributor difficult and also means the retailer isn’t even getting the least expensive product he could. Better for the retailer to have an honest, heart to heart on what he needs than to have pretenses. Nothing wrong with an economy-focused operation, but don’t pretend you want to be the king of organic specialty items.
3) Alliance with a Supplier
A few unusual operations maintain sufficient staff to handle produce procurement directly. Most ally with someone to keep the department stocked. One day we will wade into the pros and cons of broadline grocery houses, such as Supervalu, versus produce-specific houses, such as Indianapolis Fruit… For today, it’s enough to say that retailers can align with whomever they choose but should then be committed. Nothing causes inefficiency and raises costs in the system more than irregular ordering. The savings from abandoning a loyal supplier of a multitude of items because someone has a cheaper deal are mostly a chimera as wasted product and time spent dealing with this issue raises prices overall.
4) Food Safety
If an independent retailer is going to buy outside the system, at least make sure you are comparing apples to apples. Most reputable service wholesalers buy from reputable sources and maintain audit trails. You can’t compare what they are selling to what is sold by a stranger who pulls up at the back of the store with a truck full of musk melons from unknown sources.
The service wholesaler is the link between the independent retailer and the produce supply chain. When an independent goes outside that system, it puts the whole industry at risk.
It was simply great to be among people who have made it their task to help retailers sell more produce. The industry owes a lot to people all over the country who do the same thing every day. We were pleased to be a part of the effort. Many thanks to the Indianapolis Fruit people for their kind hospitality.