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The role of direct store delivery in the frozen food aisle is being challenged. At many supermarket chains, the number of DSD frozen food products is shrinking, and retail frozen food executives told SN they expect that trend to continue.Direct store delivery is still a major factor in the distribution and merchandising logistics of two major categories: pizza and ice cream. In addition, DSD is being

The role of direct store delivery in the frozen food aisle is being challenged. At many supermarket chains, the number of DSD frozen food products is shrinking, and retail frozen food executives told SN they expect that trend to continue.

Direct store delivery is still a major factor in the distribution and merchandising logistics of two major categories: pizza and ice cream. In addition, DSD is being applied by some chains that are fine-tuning their assortments on a store-by-store basis with small numbers of specialty products, such as ethnic products, health food or organic items.

But retailers said they are questioning their use of direct store deliveries as traditional DSD items such as ice cream become available for warehouse distribution.

"If you look back a number of years, all frozen food was DSD. When food stores used to carry one package of frozen peas and [old-fashioned TV dinners], they were all DSD," said Lee Salo, buyer-merchandiser for Raley's, Sacramento, Calif. For the most part, pizza remains the biggest frozen DSD category. Direct store delivery is still a particularly effective mode of distribution for frozen pizza and has developed a stronger presence with the introduction of additional stockkeeping units, some retailers said.

What's more, some of the major pizza suppliers work only through DSD. Add ice cream to that, and direct-store items can easily amount to a double-digit percentage of a company's frozens distribution.

At the Milwaukee division of Fleming Cos., for example, sales of the two major frozen DSD categories, pizza and ice cream, represent about 27% to 28% of total frozen food sales, said Ron Lusic, president. The Waukesha, Wis.-based division operates 37 corporate-owned supermarkets and supplies about 50 independents.

Lusic said there have been increases in stockkeeping units of pizza and ice cream novelties that are direct store delivered.

"We have found with the frozen pizza category we get better rotation at the retail level by DSD vendors than we did when we had store clerks rotating," Lusic said. "At one time, we had all of the pizza through our warehouse, but that changed to DSD a number of years ago."

Pizza is expected to remain a direct-store item for Fleming, Lusic said. "Right now, the perception is that the stores and our customers are better served based on the vendor stocking the product and rotating it," he said. Over the next few years, however, the ice cream category is expected to switch from DSD to warehouse delivery.

At Ingles Markets, Black Mountain, N.C., direct-store business is "picking up" in the frozen pizza category, but "shrinking" in the ice cream section as more items move through the warehouse program, said Tom Outlaw, director of frozen foods for the 160-unit chain. At Market Basket, Nederland, Texas, a 39-store chain, DSD pizza and ice cream account for perhaps 10% of the frozen category assortment, said Al Thibodeaux, grocery specialist.

"Most of the time, DSD vendors have very professional people that do the work. They are very concerned and do a better job of presentation," Thibodeaux said.

In addition to certain brands of ice cream and frozen pizza, Mayfair Super Markets, Elizabeth, N.J., obtains some specialty and ethnic frozen items on a direct-store basis, said Gene Sninski, director of frozen food for the 39-unit chain.

For example, DSD vendors deliver frozen kosher items, frozen Mexican products and frozen organic vegetables to stores with the corresponding demographic profile, he said.

"DSD supplements the warehouse. The warehouse is looking for X amount of cases to be moved. If an item doesn't meet the warehouse [requirement for] movement, the stores can get it from DSD," Sninski said.

The in-store people who stock the freezer cases at night are more intent on packing out products as fast as possible. DSD vendors, on the other hand, will take the time to wipe off their items, check the dates and rotate products, Sninski said. Lusic of the Milwaukee division of Fleming pointed out that it is often the DSD vendors who are able to supply point-of-purchase materials to the stores. "They have a plentiful supply and it is readily available if you want it. It may be easier to get some point-of-purchase materials into the hands of the retail stores from DSD vendors as opposed to through the warehouse," Lusic said. Most of the ice cream delivered to the approximately 600 supermarkets supplied by Associated Food Stores, Salt Lake City, now comes through the warehouse, but some pizza vendors continue to be available exclusively on a DSD basis, said Bill Campbell, frozen food buyer. "A very small amount of the stores' frozen mix is DSD; probably under 10% and maybe under 5%," he said. "As a cooperative wholesaler owned by the stores, our intent is to make a one-stop delivery that covers all the products they need and reduce the possibility of outside vendors delivering to them. That means the retailers have only one payment and it improves in-store security," Campbell said.

One advantage of DSD is reduction of in-store labor in filling cases and rotating items. However, the store is likely to pay more for a direct-store item, he said. Also, the more vendors that enter the store, the greater the security risk in terms of possible shoplifting, Campbell said. "The more advanced we become technologywise, the less we will need store door delivery and the more we will favor warehouse distribution. If the retailer is on line with the warehouse, he will try to get everything he can from there rather than working with separate outside vendors," he said. Outlaw of Ingles pointed out that extra time is spent checking in direct-store vendors at the store's back room. "DSD is shrinking because we can service our stores better than the DSD vendors. We are working our stores on a daily basis vs. the DSD people coming in once or twice a week," Outlaw said. Salo of Raley's said direct store deliver accounts for a "very small" percentage of frozen food items and is trending down. "We used to have a lot of DSD ice cream, but now it is all through our own warehouse. Cost is the big advantage. When we become our own manufacturer with our own distribution system, costs are driven down," Salo said. At Raley's, DSD still has a hold on pizza primarily because certain pizza companies only offer their products on a direct-store basis, he said. "I don't know if pizza works so well as a DSD item, but that is the only way we can get those products," he said.

Retailers' opinions were mixed about the ultimate fate of DSD for frozens. They continue to weigh the pros and cons of dealing with direct-store vendors, but most said they expected DSD to remain appropriate for only a few frozen food categories at best. "You have to look at each DSD vendor on an individual basis. Some do a much better job than others," said Outlaw of Ingles. "We have one DSD ice cream supplier who follows up on a daily basis and keeps the product well stocked. DSD is supposed to take some labor off the store, but we have found that is not always the case.

"I don't foresee expansion of DSD companies into other parts of the frozen food case," Outlaw added. There will always be some frozen product direct store delivered, but the method runs counter to the trend toward cost savings with warehouse distribution, said Campbell of Associated Food Stores.

"Vendors find it is cheaper to make one delivery here and let us consolidate and integrate loads with what we are already delivering to the stores. There is savings involved in that," he said. In addition, if a retailer's space management program is set up through the warehouse, it will become harder for DSD product to find space, Campbell said.

"I think it would be a convenience to have more DSD, but I don't see it growing," said Thibodeaux of Market Basket. "The categories that are growing are not those that are DSD," he said. At Mayfair, more ice cream items have become available from the warehouse rather than DSD, Sninski said. "It is easy for us to order from the warehouse. The DSD vendors send their truck up maybe twice a week. If an item is in the warehouse, we can order it on Monday for Tuesday delivery and get the exact flavor we want. We have a 99% in-stock ratio at the warehouse," he said. "In the future, I don't know that we expect to see a rise in the number or percentage of DSD items in frozen food," said Lusic of Fleming's Milwaukee division. "Our view would be where the vendor does it better than we can do it, we ought to take advantage of what the vendor can do. There is a judgment call there."