COLORADO SPRINGS, Colo. -- The relationship between food brokers and retailers is in jeopardy, because brokers are being pressured to work for free.
Retailers must stop insisting that food brokers execute in-store programs for private-label and competing products in addition to the brands they are paid to represent, said Robert Schwarze, president and chief executive officer of the Reston, Va.-based Association of Sales & Marketing Cos. Schwarze addressed his remarks last month to an audience at the ASMC's 1998 Executive Conference at The Broadmoor Hotel here.
"It is high time private-label products quit getting a free ride when it comes to in-store execution," he said. Private-label goods now make up as much as 20% of the stockkeeping units in the average store, he noted. "It needs to be clear beyond a shadow of a doubt to everyone concerned that it is neither realistic nor acceptable to believe that 20% of the labor costs of in-store execution can be shifted to us without appropriate compensation," Schwarze continued. In a follow-up conversation with SN, he noted that the problem is largely a Center Store issue, since his members, both sales people and manufacturers, represent 90% of frozen foods in supermarkets, and at least 60% of dry grocery categories.
He explained that, historically, brokers have worked at retail in order to gain a competitive advantage. But with the advent of strict category management, the advantage of being on the scene has been lost. Nonetheless, brokers continue to be active at retail, and supermarkets often expect them to help merchandise not only their own products, but also those of competitors, including private label.
Schwarze told SN that the industry has developed guidelines, called "Getting It Right at Retail," on the organization's Web site (www.asmc.org), which will be successful only if they are strictly followed.
One plan, called the "home-store concept," is being tried now by Stop & Shop stores, Schwarze said. Under it, all stores in a chain strictly adhere to a planogram issued by supermarket headquarters.
Each food broker is responsible for developing the sets in his or her category in five stores. Private-label representatives also handle five stores, he said. Thus, while each broker is merchandising the whole category in his or her respective stores, regardless of brand, the work is fairly divided.
One broker in the audience, however, commented that the home-store concept could give retailers the impression that food brokers are their "worker bees" and must take direction from them. Another broker noted that his firm is being asked to cut in competitors' items all day long.
But Schwarze disagreed, saying, "We have to let the retailers know that we bring an awful lot to the party that has been taken for granted. Through the home-store concept, we can make that point."