PALM DESERT, Calif. -- Suppliers should not turn away from the supermarket industry that has historically supported them in favor of newer formats, Jack Brown, chairman, president and chief executive officer of Stater Bros. Markets, Colton, Calif, said here last week.
In a retailer keynote address at last week's convention of the Western Association of Food Chains -- to an audience composed primarily of national and regional manufacturers -- Brown said, "Our supermarkets and your companies or their predecessors have been through a lot together -- wars, depressions, recessions -- as partners.
"We went through shortages with you, but we saved space for your products on our shelves because we were partners.
"During the price freeze of the 1970s, we could have discontinued all your items under the law and replaced them with your competitors' like items while increasing the retails and the margins, but we didn't because we were partners.
"And when you asked us to carry expanded lines and facings, we did it because we were partners.
"Now, partners, we need you to not turn away from us. We need to know the lowest price your product sells for anywhere in America, and we need to know if it's better to buy your product through a buying office in Denver or Kansas City or St. Louis or Indianapolis to get the best price.
"And we need to know about all the promotional funds that you're making available to anyone, anywhere, including new-item funds, shelf-allowance funds, slotting funds, funds for nonprofit foundations, or funds for bringing celebrities for store appearances or sporting events.
"Let us always be partners."
Following Brown to the podium was Indra Nooyi, president and chief financial officer of PepsiCo, Purchase, N.Y., who also spoke of the partnership that exists between retailers and vendors. "We try to engage in relationships with our business partners that are mutually beneficial," she said, "and we succeed if our partners succeed, and as we grow, you grow."
Nooyi said supermarkets have an advantage over club stores "because of your experience and the space you have available. You have the space to carry a wide variety of innovative products and to merchandise in ways that grab people's attention and create excitement, and if you can do that, then you've won the battle."
Beyond partnerships with manufacturers, Brown said supermarkets must do a better job taking care of their customers if they want to retain them.
When he started in the food industry as a box boy, Brown recalled, one of his jobs was sweeping the sidewalk outside the store where he worked, "because somebody important was coming -- the customer. Now Wal-Mart opens its doors to customers with a greeter and makes the customer feel welcome -- verbally washing the sidewalk.
"In addition, Wal-Mart makes the customer feel that whatever he buys is going to be available at as good a price as there is for that item, and on top of that, it runs commercials that make you feel all warm and fuzzy -- how Wal-Mart saved the Special Olympics in one town, how it saved a local manufacturer in another community, how its employees built Homes for Habitat.
"As supermarket retailers, many of us are still operating in our hometown areas, and we cannot allow others to come into our marketing area and out-hometown us."
He likened the situation to a lion who walks its territory every morning "and leaves little messages in all four corners to let others know everything in that territory belongs to him. I am saying we ought to walk our turf every day and be sure someone else isn't coming in under the radar to threaten the market shares that we've worked so long and hard to attain.
"We can't give an inch to the club stores. But sometimes, we're our own worst enemy."
Holding up a copy of the food section of the Los Angeles Times, Brown said there was not a single retailer ad in it. "I can remember when Ralphs ran 12 pages of ads and Vons ran 10 pages and Albertson's ran eight pages, but we've found what we thought is a better way to communicate.
"We've given the club-store industry a home-field advantage by following them into preprints, fliers, mailers and door-knobbers. So if the customer seems far away, just who is it that moved?"
A store's associates can also be a way for supermarkets to communicate with customers, Brown said. "We must be visible, and we need our associates to take that message home to customers -- but if our associates don't feel good about themselves or their job, they will never feel good about our customers or the company."
Club stores account for 4.5% of total food sales this year, Brown said, and by 2005 they are expected to account for 6.4%, excluding pharmacy and fuel. "So the customer is clearly telling us they want clean stores, low prices, accurate scanning, fresh produce and great meats, plus pleasant, clean-cut checkout clerks to serve them."
The retail companies that succeed long term will be the ones that service customers best, "whether they be supermarkets or other outlets," Brown said. "And it will be the customer who always decides who survives and who succeeds or fails.
"Supermarkets are a brand, too, just like product brands, and customers expect a certain consistency, a certain value and quality in the service and friendliness we provide.
"But if we fail the market or fall short, someone else will deliver those goods and services to the folks who used to be called our customer. And as the customer count shrinks, sales drop, layoffs become necessary and we're caught in a downward spiral that's almost impossible to stop, just like the tragedy of Kmart."