New supermarket monopoly conspiracy theory

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Ultimate Geek

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#2691448 12-Apr-2021 14:29

Rikkitic:

OldGeek:

It all boils down to money - both the supplier and the retailer trying to maximise whatever leverage each has over the other.

How about consumers maximising whatever leverage they have? If you want my money, give me what I want!

Retailers stock the products they think consumers want. Consumers choose from what a retailer has. Let me know if you ever find a retailer who stocks nothing and allows you to simply tell them what you want and then gets back to you with an unbeatable price.

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Senecio

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#2691552 12-Apr-2021 16:32

LostBoyNZ:

It'd be really interesting to hear someone who works in the industry.

I work in the industry and can give some insight. For clarity I work in the FMCG manufacturing business and I supply to supermarkets as well as many other retail channels.

First things first. The supermarkets themselves do not collude, conspire or in anyway agree on what each other will stock or range. That would be unethical and illegal. If you find a product that is stocked by one but not the other then one of 2 things is occurring.

The manufacturer has reached an exclusive agreement with one of the supermarkets. Why would we as a manufacturer choose an exclusive agreement? Well its complicated. Basically if the numbers stack up based on shelf space, volume throughput and margin then we may choose to go exclusive. Exclusive agreement are more prevalent in other retail chains like service stations than they are in supermarket but they do exist.
One of the supermarkets has simply chosen not to range that product because the numbers don't stack up for them.

The supermarkets are broken down into categories (hygiene, bakery, dairy, snacks, soft drinks etc....). Each category has a lead buyer who runs range reviews. The frequency of the range reviews vary on the category but at least one major range review every year with a minor range review every 6 months. At the range reviews product performance is analysed in minute detail and those products which are not performing are chopped. When that happens its an opportunity to insert a new product or the shelf space may be given to supplier to expand their shelf facings. Our sales team live and die by the range reviews. Protecting what you have is seen as a win. Taking incremental shelf space from a competitor is cause for celebration.

Do we pay for shelf space? Yes and no. In the standard aisle we don't directly pay for shelf space but we do negotiate on discounts and rebates to make it attractive for the retailer to stock our products. Effectively we give up some of our margin so that the retailer can meet their margin expectations. You will here this referred to as Trade Spend. I can't speak for other manufacturers but our trade spend is almost as high as our cost of goods!

However, off location displays (end of gondola, front of store check outs, Major displays on floor space etc...) are in high demand and you will pay a premium through trade spend to acquire these. These are usually only leveraged for new product launches, major promotions etc.... due to the cost.

Hope that helps.

Inphinity

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#2691556 12-Apr-2021 16:45

The other thing to bear in mind is that New World, Pak n Save, and Four Square, are part of the Foodstuffs co-operative - meaning each store is independently owner-operated, and while the brand as a whole may be able to supply a specific product or brand, and individual owner-operator may choose not to. You will even find New World and Pak n Save stores not stocking some of their Own Brand (Value, Pams, Pams Finest etc) products in some cases.

Another factor is both major chains have their 'Own Brands', such as the Value/Pams/Pams Finest range for Foodstuffs, and the Essentials/Select/Woolworths/Countdown range at Countdown, and how they choose to position certain products in their own ranges against other brands.

Bananabob

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#2691557 12-Apr-2021 16:45

I am old enough to remember the grocer's shop. There you could ask them to order that special item and they would. Can't do this at Countdown!

afe66

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#2691615 12-Apr-2021 16:54

I would be interested to see whether just different sku numbers would be enough to say its a different product if they are the same in all other respects. Ie the machine within the box and the included accessories etc if it went to court.

Bananabob

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#2691619 12-Apr-2021 16:57

afe66: I would be interested to see whether just different sku numbers would be enough to say its a different product if they are the same in all other respects. Ie the machine within the box and the included accessories etc if it went to court.

I think you might find that although the item looks exactly the same the model number is not.

neb

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#2691632 12-Apr-2021 17:56

afe66: I would be interested to see whether just different sku numbers would be enough to say its a different product if they are the same in all other respects. Ie the machine within the box and the included accessories etc if it went to court.

It's not the SKU, it's the model number. There are slightly different model numbers used for the same device for this purpose. If you want a particularly egregious example of this, look at Braun electric toothbrushes, both within NZ and compared to the ones sold overseas.

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gzt

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#2691646 12-Apr-2021 18:38

I agree it's irritating. The issue is more visible now with increased supermarket choice. It's relatively common to visit two supermarkets to complete a shopping trip.

Let's not even mention two identical brand similar size stores with a different stock list - on the plus side different specials - it's worthwhile visiting now and then.

Trollies, parking, shopping, waste of time. I wish the deliveries suited me..

sbiddle

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#2691712 12-Apr-2021 19:34

Oblivian:

Also, take a note of your standard buy pricing since Apr1. on medium items. Might find each item up 20-50c like I have been. And apparently more to come (herald blaming the min wage changes across the entire chain means ~$1 at the shelf)

Specialty breads up to $4.30. KFC up, Subway up, think most the maccas have gone on some items again. V, Chocolate bars. The usual healthy treats ;)

Getting a bit OT but price increases in the past month have gone nut everywhere in retail.

There are 3 different sushi places I tend to frequent for lunch - all have seen 10 - 20% price increases. Two bakeries I tend to stop at have both had price increases. Two cafes have seen price increases, and another restaurant I visit once every couple of weeks has had another increase. Went out for Chinese on Sat night at the usual restaurant and the restaurant prices have all gone up too.

sbiddle

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#2691714 12-Apr-2021 19:36

Rikkitic:

Do supermarkets give each other ‘exclusive rights’ on certain items or is there something else going on here? I am a vegetarian and I buy the Veggie Delights ‘classic hot dogs’. They used to only be available from Countdown

Shelf space is a finite resource - there are tens of thousands of SKU's in this country and the average store cannot possibly carry everything. In a category where sales may not be big it's gonna be pretty ruthless if you have a product that doesn't sell well.

KiwiSurfer

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#2691771 12-Apr-2021 21:44

gzt: It's relatively common to visit two supermarkets to complete a shopping trip.

Is it really common? I usually just go to one supermarket and accept that there may one or two cases where I can't get exactly what I want although I'm happy to just grab an alternative product if it saves me from making another trip elsewhere.

MadEngineer

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#2691789 12-Apr-2021 22:46

Bananabob:
I am old enough to remember the grocer's shop. There you could ask them to order that special item and they would. Can't do this at Countdown!

It may depend on the store but I know New World will do special orders.

You're not on Atlantis anymore, Duncan Idaho.

mattwnz

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#2691798 12-Apr-2021 23:48

sbiddle:
Oblivian:

Also, take a note of your standard buy pricing since Apr1. on medium items. Might find each item up 20-50c like I have been. And apparently more to come (herald blaming the min wage changes across the entire chain means ~$1 at the shelf)

Specialty breads up to $4.30. KFC up, Subway up, think most the maccas have gone on some items again. V, Chocolate bars. The usual healthy treats ;)

Getting a bit OT but price increases in the past month have gone nut everywhere in retail.

There are 3 different sushi places I tend to frequent for lunch - all have seen 10 - 20% price increases. Two bakeries I tend to stop at have both had price increases. Two cafes have seen price increases, and another restaurant I visit once every couple of weeks has had another increase. Went out for Chinese on Sat night at the usual restaurant and the restaurant prices have all gone up too.

It is not OT. A lot of things are going up in price and likely food could go up a lot. Then we are going to hear compliants about supermarket prices again. We surely didn't think we could print a hundred billion plus dollars and pump up house and asset values without potentially massive inflation occurring?

I think it is referred to as Stagflation

I don't know how businesses are going to handle all the increased costs and where the money is going to come from.

mattwnz

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#2691799 13-Apr-2021 00:13

KiwiSurfer:
gzt: It's relatively common to visit two supermarkets to complete a shopping trip.

Is it really common? I usually just go to one supermarket and accept that there may one or two cases where I can't get exactly what I want although I'm happy to just grab an alternative product if it saves me from making another trip elsewhere.

Often the two big players supermarkets are located close by. So shouldn't be too much of a hassle visiting both at the same time. I find the often one is more expensive that the other when things aren't on a promo. You can potentially save a lot by picking and choosing. Also some supermarkets give a percentage discount to older shoppers if they shop on a certain day.

I just wonder what the regulators were thinking when they allowed 3 big players, to go down to 2 big players. Especially in a small country like NZ

K8Toledo

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#2691809 13-Apr-2021 01:45

LostBoyNZ:

CrashAndBurn:

From what I understand, product makers pretty much buy "shelf/space" rights from retailers to sell their items. From here you add other conditions such as exclusivity and volume and margins amongst other things. It is possible that it was a slow mover for Countdown at that store hence they decided to let go of it and allocate the space to another product that has a quicker turnover.

That's what I understand too. I know from experience (6 years ago at least) that Countdown sells the endcaps (the displays at the end of isles) and they sell being promoted in the mailer. I'd be pretty sure they sell shelf/space rights too. Taking soft drinks as an example, look at the space Coke gets vs Pepsi. Yes Coke vastly outsells Pepsi, and in part I know the shelf space is sometimes taken by pushy reps and merchandisers, but I'd be pretty sure deals go on.

It'd be really interesting to hear someone who works in the industry.

A friend of mine is head of two grocery sections at Woolworth's (for the entire country). If you like I can ask him.

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