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Rikkitic

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#284292 12-Apr-2021 12:08
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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 and I didn’t think much of it. Then Countdown stopped stocking them. A little later I found them at New World, which is now the only place that stocks them.

 

In other countries different supermarkets stock the same product lines, as ours here also do for many things that are not the store’s own brands. But I wonder if I can spin this particular example into a conspiracy theory. I remember several years ago our local New World suddenly stopped stocking a particular organic milk. I complained and had a long discussion with the store manager about this. Eventually he admitted that orders had come from the New World franchise headquarters to stop stocking this particular milk brand. He didn’t say why and the discussion ended there.

 

New Zealand does seem to be a country with a monopoly problem (too many to quote here, look up Commerce Commission). So is there something nefarious going on here or does it have a legitimate reason? Why can’t you go into any supermarket and find the same items as in any other one, excepting the store brands, of course? Is it Q’s fault?

 

  





Plesse igmore amd axxept applogies in adbance fir anu typos

 


 


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Senecio
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  #2691552 12-Apr-2021 16:32
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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.

 

 

 

     

  1. 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.
  2. 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.


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