NEW ORLEANS -- As manufacturer, wholesaler and retailer decision-making moves closer to the store level, food brokers will continue as a vital link in the distribution pipeline.
That optimistic forecast came from industry speakers last week at the National Food Brokers Association's Convention and Marketplace Expo here, who said brokers are recasting themselves as broad-based consultants with expertise in numerous areas. These include product development, manufacturing, logistics, technology, planning, selling, local consumer markets and retail execution, said Vic Orler, partner, and Gary Singer, manager, at Andersen Consulting, Chicago, in their keynote presentation "Broker 2000."
"Brokers are uniquely positioned to act as the 'bridge of trust' between retailers or wholesalers and manufacturers," Orler said. "They know their principals. They know their customers. And they provide continuity in a changing industry."
Key consumer "wants" and industry efforts to meet those demands are redefining and expanding the broker's role, Singer said. Consumers want convenience, value and selection plus more fresh, healthy and prepared foods. Manufacturers,
wholesalers and retailers are cutting costs, rethinking how they go to market, developing new store formats, introducing new products, implementing direct-to-consumer channels and incorporating information technology.
"At the local level, the opportunity lies in the ability to use geodemographic data to provide appropriate assortments in the appropriate stores," Orler noted.
Consolidation also has spurred brokers' need to diversify. In 1985, there were 2,500 brokers representing 45% of all-commodities volume; today there are 1,300 brokers representing 55% of ACV, Singer reported. Based on surveys and interviews Andersen conducted with more than 80 manufacturers, retailers, wholesalers and brokers, Orler and Singer listed what high-performing brokers must do to compete:
· Define the most effective way to go to market.
· Provide unmatchable micromarketing capabilities.
· Use their competence in store-level execution to help their trade partners achieve a competitive advantage.
· Embrace value-based compensation.
· Find new opportunities up and down the value chain.
In particular, brokers will be key in micromarketing.
"Broker retail salespeople are out in the stores every day, gaining a thorough understanding of what works in what neighborhoods," Singer said. "They can leverage their relationships with retail and wholesale customers in the market to get access to local market-, store- or consumer-level data."
Brokers have critical mass in stores, he added. "This size advantage enables brokers to be more economical in providing greater in-store presence on behalf of their principals."
Singer and Orler said brokers can help develop new products; tailor store assortments; and devise, execute and monitor promotions and in-store merchandising. Furthermore, they can aid in category management, ordering, shipping, cross-docking and direct-store delivery.
In the future, brokers also could help in making store perimeters more profitable, arranging in-store sampling and creating in-store meal solution centers, Orler said.
"They will lead the industry from shelf management to shelf marketing, as they help manufacturers and customers use shelf space as a marketing vehicle to target and reach the right customers," he explained.
Earlier in the convention, held Dec. 1 to 4 by Reston, Va.-based NFBA, other prominent speakers stressed brokers' importance.
G. Craig Sullivan, chairman and chief executive officer of Clorox Co., Oakland, Calif., said, "We really do have a competitive advantage by using food brokers. It's no longer an issue of it being cheaper; we're large enough to have our own direct-sales force. We're with brokers because we think you do it better. We think you're more efficient and that we get superior sales execution."
Accepting NFBA's Watson Rogers Award, Anthony "Tony" O'Reilly, chairman, president and CEO of H.J. Heinz Co., Pittsburgh, said, "A critical value brokers possess is that knowledge of the market and that knowledge of retail customers."