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The majority of independent retailers are happy enough with the business relationship they have with their primary grocery wholesaler to be willing to "absolutely" recommend their wholesaler to others, according to the findings of the recent Food Marketing Institute (FMI) report, "Independent Operator Insights into Wholesaler Relations and Services."
FMI said the study revealed that 60 percent of independents have had a long and satisfactory relationship with a wholesaler, averaging 19 years. Another 34 percent of independent grocers would recommend their wholesaler, but "with reservations," reflecting less than full satisfaction. These independents said they need more support to compete effectively with larger retailers.
"This research sends three key messages," said FMI's v.p. of wholesaler and member services, Jeff Rumachik. "Independent operators and wholesalers have strong and enduring ties, a rock-solid foundation that is essential for successful business partnership. Wholesalers can improve their services and, in some cases, independents can use them more. And the strong partnership suggests that wholesalers will make improvements to help their independent customers succeed."
The report is the second in a series of three on the future of food wholesaling, conducted by FMI in collaboration with Saint Joseph's University, and funded by the Gerald E. Peck Fellowship.
The results of the second report are best seen in the context of first report, "Past and Present Landscape of Food Wholesalers," which was based on extensive interviews with leading wholesaler executives, the trade association said.
"Wholesalers recognize that independents can outflank supercenters with value-added strategies that emphasize organic products, foodservice, catering, fresh perishables, and products and services tailored to a specific ethnic community," noted Richard J. George, Saint Joseph's professor of food marketing, who led the research for both reports. "As a result, wholesalers must tailor their services to the specific needs of each customer. Meeting this considerable challenge requires innovations in technology and logistics, which wholesalers are striving to achieve."
For the second study, researchers asked independent retailer executives, mainly owners or c.e.o.'s, whether their wholesaler offers a wide range of services, whether they use those services, and how satisfied they are on a 1-5 scale, with 1 being "very dissatisfied," 2 "somewhat dissatisfied," 3 "neither dissatisfied, nor satisfied," 4 "somewhat satisfied," and 5 "very satisfied."
The ratings in almost all cases fell between 3 and 4.
Most meaningful were the ratings for the most highly used services. For instance, executives reported the following use levels and satisfaction ratings on the following marketing services: category management strategy, 71 percent use with a median rating of 3.5; competitive pricing services, 70 percent, 3.4; assortment strategy, 66 percent, 3.5; and merchandising strategy, 66 percent, 3.6.
According to one respondent, "One of the things we are totally lacking is help in merchandising perishables." Another noted, "We need our wholesaler's help in doing private label better, much better."
Retailers gave some of the highest ratings to communications and order management services: product recall information, 94 percent use with a median rating of 4.2; timely contact with account executive, 77 percent, 3.9; industry news updates, 60 percent, 3.8; handheld order entry, 91 percent, 4.1; and computer-assisted ordering, 54 percent, 4.0.
According to the report, more efficient order management systems boost efficiency and help give independents a higher return on assets.
Retailers also rated highly accounting services such as bookkeeping and rebilling (4.4) and insurance coordination (4.1), but only 27 percent and 21 percent use these services, respectively. Growing financial challenges could lead more independents to employ financial support in the future.
"Independent Operator Insights Into Wholesaler Relations and Services" was based on a survey of 142 executives from Feb. 1 to April 15, 2008.
The two released reports in the Peck Fellowship series are available for purchase by calling the FMI Store at (202) 220-0723 or visiting www.fmi.org/store/.
The third report in this series will be "Generation Y: Food Shopping Attitudes and Behaviors."