Versatility, fidelity - the keys to doing business with retailers
listed with the retail chains is a constant struggle, but as
visitors to last week's SIAL exhibition heard, the supermarket
groups are ready to listen, provided suppliers make the right
moves.
When consumers visit their local store to do their weekly food shop, they probably give little thought to how stores select the products they stock, or indeed how companies manage to get their products listed there.
But this, of course, is the most important part of a food producer's business - after all, if no store wants to sell the product, there is no point in making it. Negotiations between retailers and suppliers are often fierce, and there have been scare stories for many years about the fees and other conditions charged (or not, depending on which side you listen to) to stock products.
The general rule of thumb when it comes to negotiations is 'bigger is better', which of course is bad news for the many thousands of small and medium-sized companies who rely on the major supermarket chains to sell their products.
This thorny issue was the subject of a debate at last week's SIAL show in France, where representatives from the retail trade rubbed shoulders with a number of SMEs in front of an audience of buyers and producers, organised by the Federation des Enterprises et Entrepreneurs de France (FEEF).
Food producers each have a different plan of attack when it comes to getting their products listed, either under their own brand or under the retailer's label.
For Charles de Fougeroux, head of the Reims-based biscuit maker Biscuits Fossier, the best plan of attack from SMEs is to focus first and foremost on the local market. "Our products are all tested in our own stores, of which we have several in Reims," he said.
"If they are successful there, we know we have a good product to present to the local supermarket groups, most of which have a policy of stocking local produce anyway. Most of these stores will take the whole range of Fossier products, and the aim is then to try and push some of our products into the wider French market."
Vincent Taveau, general manager of Atlantique Alimentaire, a producer of frozen foods, takes a completely different approach. "For me, the key thing is get my products seen by the biggest number of potential clients as possible, whether they be retailers or catering companies. We also try to make sure our range of products is adapted to consumer requirements, and to the requirements of the stores themselves."
This latter point is one of great importance, for all food retailers are not created equal. Also taking part in the debate were senior managers from two French supermarket chains, Auchan and Monoprix, both of which also operate in very different ways.
Monoprix is "the PME of the French retail sector" according to Robin Saulnier, head of promotions at the city centre supermarket group. "Our turnover of €3.6 billion a year makes us much smaller than other retailers, and that means we do things differently. The important thing for us when deciding whether or not to stock a product is whether it fits with our requirements.
"Our stores are more expensive to run, because they are always in the centres of cities, so we have tried over the years to come up with innovative product ranges in a bid to drive sales. This is why we launched ranges such as Monoprix Gourmet in 1985, Monoprix Exotique in 1990 and Monoprix Bien Vivre in 2001." Producers able to supply products in these ranges are obviously off to a good start in the negotiating process.
Antoine Letard, head of the sweet grocery products channel at Auchan, explained that his company also had an excellent rapport with SMEs. "We have 9,000 suppliers, and 7,000 of them are SMEs, because we have made a particular effort to partner this vitally important part of the industry. Two years ago, we introduced partnership contracts with SMEs, and we have around 250 of them at the moment. This should reach 500 by 2003."
Auchan, too, is looking for innovative products which are adapted to the needs of the market, and is keen to provide as much information to its SME partners as it can to help them create such products, giving them access to its database of statistics and trends. But it is also demanding. "We are a big group, and our suppliers need to have the capacity to supply all of stores, whatever size and in perfect state. We also want fidelity from our suppliers - that is one of the reasons why we introduced the contracts."
The customer is king
With both retailers, the customer is the most important person, of course, and that shades every buying decision they make. This is vital information for SMEs as well. "SMEs must succeed, we have invested too much of our own time and money to fail, and so we have to be certain that we are offering stores what their customers will want to buy" said Charles de Fougeroux.
"This means we need to be sure that our products are of the highest quality, and at a reasonable price, and we often use local business school students to test public reaction to our products. The consumer is the only judge of a product's success."
For Vincent Taveau, versatility is the key. "Although I like to make my products known to a wide number of fascias, I will often only stock them in a handful, and each of those is likely to be a slight adaptation. For example, I am more likely to offer Monoprix, which is used by many shoppers at lunchtime, individual frozen quiches than, say, a family sized quiche. I am in frequent contact with the marketing departments at most chains to find out what they are selling at the moment, and try to supply them with something which they do not currently have."
This was a sentiment shared by Auchan's Antoine Letard. "We want our suppliers to know our stores, to know what products we stock and to suggest products which can complement that range." Robin Saulnier from Monoprix agreed. "Some 80 per cent of our one-million daily customers are women, many of whom work, and we need products which appeal specifically to this kind of shopper. We rarely put out tenders for products, as many of the foods we stock are unique, and are presented to us by the companies themselves."
With most of the chains using increasingly centralised purchasing operations - both Monoprix and Auchan have central buying operations - sales teams visiting stores are becoming a thing of the past. "Only our exclusive Monoprix brands, the upmarket own label products, are really negotiated directly between the store and the supplier; otherwise, suppliers have to pass via EMC, which is also the central buying arm of Casino, as this offers significant economies of scale for both chains," commented Saulnier.
"We do not like to see too many salesmen visiting our stores as they are so small and so busy most of the time that our staff do not have the time to spend listening to the latest propositions from salesmen."
Letard had a different view. "Although we too have a central buying unit, we like to see companies' sales teams in our stores, as that means that they are getting out into the field, checking out what the opposition is doing and what we are stocking in our stores. That is the best way they can offer us products we need."
