CINCINNATI -- Not only is Kroger Co.'s proposal to consolidate video distributors unpopular with vendors, but it is also being resisted by some of the company's own divisions, according to video industry sources.
or they want to do business with. In some cases, they switched around a bit, too," he said.
While there has been some complaining from the divisions, "one distributor is going to be picked. Period. The end," said the executive.
Paul Bernish, spokesman for Kroger Co. here Paul Bernish declined to comment.
Long-term relationships between video distributors and their supermarket customers are common and hard to break. "Supermarkets are very loyal to their vendors," said Ron McMillin, vice president of sales for St. Louis-based Sight & Sound Distributors' western region.
"When a distributor makes money for a supermarket and earns its stripes, they stay with them for a long, long time," he said.
"Retailers develop relationships with distributors and in the case of our competitors, some of those relationships have been pretty long term," said Doug Meadows, president of Major Video Concepts, Indianapolis. "They like doing business with a distributor. They are comfortable. They know how they operate."
"I know the groups I deal with hopefully would be reluctant to change if we weren't successful in winning the Kroger business," said a video distributor's branch manager. "There are a lot of relationships out there," he said. While upper management is apparently aware of the divisional reluctance to change, "the word is that they are absolutely going to do this, but I don't know how they are going to enforce it," he said.
Changing distributors is a difficult transition, especially for a company of Kroger's size. Of the current distributors, the one with the most of Kroger's 18 divisions is ETD Entertainment Distributing, Houston, with eight. "So in a best-case scenario, you would have to change 10 divisions. That's a lot. You've got 10 relationships out there," said the branch manager.
With so many branches, it could conceivably take a good part of the three-year contract term Kroger is seeking to make the transition.
